The industry comprises of 29 companies with the production capacity of 44.09 million tons.

There are four foreign companies, three armed forces companies, and 16 private companies listed
on the stock exchanges. The Pakistani cement industry is divided in two sectors, namely the
Southern and Northern region. The northern region has the bulk of the units and the division ratio
stands at 75-25. The north with its production capacity of 35.18 million tons, while the south with
8.89 million tons, compete for the domestic market of over 19 million tons.
There 16 companies listed in the Karachi Stock Exchanges 100 index.
The Northern sector contributes for more than 80% of the sales of the countrys cement sector.
The sector is also dominant over the southern sector with respect to our exports, and almost 98% of
our exports is contributed by the northern sector. The northern region has an edge over the southern
mainly because the transportation charges for the sector are very low as the units are located very
close to the queries and limestone mines close to the queries and limestone mines.
Due to political instability and lack of allocation of funds for public sector development
program, cement industry of Pakistan was in the recession phase had registered an average growth
rate of 2.96% for the period from 1990 to 2002.
For the period from 2003 to 2007 cement industry of Pakistan had registered an average growth
rate of 20%.
The boost in cement sector is because of the rising construction activity in the country,
reconstruction activity in Afghanistan and increasing development expenditure by the government
APCMA is the apex body of the cement manufacturers of Pakistan. It is registered body under
section 3 of the Trade Organization Ordinance 2007 wide license no 14, dated April 26, 2008 issued
by Ministry of Commence. It was incorporated on14th of September 1992 under section 32 of the
Companies Ordinance 1984.
There are 4 major players in the cement industry of Pakistan: Lucky Cement, D.G Khan
Cement, Best Way Cement and Askari Cement.
Significance :

Pakistan cement factories continue to make significant progress in cement exports.

The cement sector is contributing above Rs 30 billion to the national exchequer in the form of
taxes and accounts for almost 3% of Pakistans export
Now Pakistan is ranked 5th in the worlds cement exports after a huge increase of 47 percent in
exports during last fiscal year. According to the Global cement report, China maintained first
position with 26 million tonnes in exports, while Japan got second position by exporting 12.6
million tonnes of cement. Third largest cement exporter in world is Thailand with around 12 million
tonnes, followed by Turkey which exported 11.6 million tonnes of cement. Pakistan now at 5th
position has left Germany behind by exporting 11 million tonnes of cement during last fiscal year.
Germany now stands at 6th position with 9 million tones exports. Pakistan is rich in deposits of
limestone, clay and gypsum, which constitutes the basic raw materials of manufacturing cement.
Cement industry is indeed a highly important segment of industrial sector that plays a pivotal role in
the socio-economic development. Since cement is a specialized product, requiring sophisticated
infrastructure and production location, mostly of the cement industries in Pakistan are located
near/within mountainous regions that are rich in clay, iron and mineral capacity. Cement industries

in Pakistan are currently operating at their maximum capacity due to the boom in commercial and
industrial construction within Pakistan.
The main factors behind increase in demand of
Types of Production Processes
cement were: 60 percent higher Public Sector
1. Dry Process (In Pakistan
Development Projects (PSDP) allocation, seven percent
most of the industry employs
GDP growth, increasing number of real estate
this method)
development projects for commercial and residential use,
developing export market, expected construction of mega
2. Semi-wet Process
dams, reduction in excise duty by Rs 10 per bag and
declining interest rate scenario.
The cement sector is contributing above Rs 30 billion to the national exchequer in the form of
taxes. Cement industry is also serving the nation by providing job opportunities and presently more
than 150,000 persons are employed directly or indirectly by the industry.
This sector has invested about Rs 100 billion in capacity expansion over the last four years.
Overall cement plants of Pakistan operated at 80 percent capacity utilization as compared with 81
percent utilization in the same month of last year.
The cement industry of Pakistan entered the export markets a few years back, and has
established its reputation as a good quality product. The latest information is that India will import
more cement from Pakistan. So far 130,000 tonnes cement has been exported to the neighboring
country.
Currently, the export demand is expected to be from new inductee India along with other
countries like Gulf Cooperation Council (GCC) countries, due to rising oil prices-led economic
growth.
The contribution to GDP from the cement sector is around 0.9 % and is expected to reach 1.5%
given the export forecast made for the next 10 years.
Pakistan is a signatory to the WTO and cannot keep its eyes shut to the realities. What Pakistan
needs to do is to make the best of a given situation and try and develop a strategy to get maximum
benefit from globalization and WTO.

The local industry now cannot be protected with the use of quotas or very high tariffs. The
government needs to build a very strong network of Anti-dumping and countervailing duties to
protect the local industry against the onslaught of unfair foreign competition.

Types of cement
Cements that are used in international market are divided into two main categories on the basis of
their properties: hydraulic and non-hydraulic. Different type of cement can be produced used
different quantities of gypsum, clinkers and other additives, but only certain types of cement are
commonly utilized today because of their costs and binding power.

Non-hydraulic cement
Non hydraulic cement is cement which cannot harden while in contact with water, as compared to
hydraulic cement which can. When non-hydraulic cement is utilized in construction, it must be kept
dry so that it will hold the structure. Due to difficulties related with waiting, it is rarely used in
current market.

Hydraulic cement
Hydraulic cement is cement that has an ability to set and harden after being combined with water.
Hydraulic cement is made mainly from limestone, certain clay minerals, and gypsum, which are
burned together in a high temperature. Hydraulic cement is the main cement utilized in modern day
construction.
Only the following types of cements are available in Pakistan cement industries:
1.
2.
3.
4.

Ordinary Portland Cement

Sulphate Resistant Cement
Blast furnace Slag cement
White cement

Ordinary Portland Cement (OPC)

Ordinary Portland cement is available in darker shade as well as in light shades in Polypropylene
bags of different sizes with different brand names to suit the requirement of users.
It is used in all general constructions especially in major prestigious projects where cement is to
meet stringent quality requirements; it can be used in concrete mortars and grouts etc. Ordinary
Portland cement is compatible/consumable with admixture/ retarders etc.

Sulphate Resistant Cement (SRC)

Sulphate resistant Cements best quality is to provide effective and long lasting strength against
sulphate attacks and is very suitable for constructions near sea shores as well as for canals linings. It
provides very effective protection against alkali attacks.
Slag Cement
Slag cement, has been incorporated into concrete projects for over a century to improve durability
and reduce life cycle costs. Among its measurable benefits in concrete are better workability and
finish ability, higher compressive and flexural strengths, and improved resistance to aggressive
chemicals.
White Portland Cement
White Portland cement or white ordinary Portland cement (WOPC) is similar to
ordinary, gray Portland cement in all respects except for its high degree of
whiteness.White Portland cement is also used in combination with inorganic
pigments to produce brightly colored concretes and mortars.

Factor conditions:
The factors that come under the factor conditions of the cement industry are raw
materials, labour, energy sources, machinery, technology, capacity utilization,
investment, infrastructure (transportation), and energy sources. The climate, soil, mineral

resources are all available in good quality but compared to international competitors our products
generally dont meet international standards

Raw materials:
The two main raw materials used in the manufacturing of cement are:

Limestone: It is a very strong rock and is often cut into large blocks and used in the
construction of buildings and skyscrapers. Cement is a manufactured product consisting essentially
of a mixture of calcium silicates and calcium aluminates. These compounds react with water and in
so doing cause the cement to set. The requirement for calcium is supplied by limestone.
Clay: the most essential component of cement is clay. The characteristic that makes it that
important an ingredient of cement is its firmness; clay becomes firm and solidifies when heated in a
kiln.

The following raw materials are required in the process of making cement:

Limestone
Clay
Fuel Ash
Gypsum
Sulphur
bauxite

Main Utilities used for Cement Production

These include fuel oil, natural gas, coal, electricity and water.

Basic Stages in Cement Production

Labor
Since this industry is a highly capital intensive industry, the need for abundant cheap labour is high.
The cement industry employs around 150,000 people either directly or indirectly. The skilled to
unskilled labour in the industry is approximately 2:3. This unskilled labour is required for loading,
unloading, packaging, as drivers etc. Whereas the skilled labour mostly comprises of engineers:
chemical, mechanical, mining, electrical etc. and majority of these are graduates from NED or
NUST. Apart from sending employees abroad for training, the National Institute of Labour
Administration and Training (NILAT) plays a significant role.

Energy sources
Energy cost constitutes about 60-70% of the total manufacturing cost of cement. The cement
industry initially used furnace oil as their basic fuel but now most of the companies have either
switched to gas or coal. Most of them have made the conversion whereas some are midway between
them. According to the data of the APCMA of mid-2007, using furnace oil, the cost of producing
cement per tonne was approximately Rs2083 whereas the cost using coal was Rs868 therefore coal
has proven to be a good option due to the abundance of coal in the country where it is found in all
the four provinces. One problem of using coal as a basic fuel is that the coal extracted in
Pakistan has a high sulphur content. Additionally, other alternative fuel sources include scrap
tyres and municipal waste. For example Fauji cement, under active management, explored
alternative fuel sources and has now installed Pakistans first Refuse-Derived Fuel (RDF

Machinery
The machinery used in the manufacturing of cement include limestone crushers, limestone grinding
mills, gypsum crushers, gypsum mills, coal mills, coal crushers etc. and these are mainly imported
from countries like Germany, Denmark, Italy, Korea and China. However, China is the biggest

exporter of machinery to Pakistan whereas others have a smaller share. The Chinese manufacturer,
Shanghai Shibang Machinery CO. LTD (SBM) is a professional manufacturer and supplier of such
machinery. It is major Chinese supplier to Pakistan. At present, however, the crushing and grinding
equipment is the widely used cement production equipment. Even though the imported machinery
makes the quality of the Pakistani cement competitive in the World market, it also raises the cost
because it is expensive to import.

Capacity utilization
One of the biggest problems faced by the cement industry is the idle capacity of many companies.
Overall the cement industry operates at approximately 80% capacity utilization. Even though, it is
seen as a huge problem because of the inability of firms to achieve the full benefits of economies of
scale, many large plants like Lucky and Fauji enjoyed the excess capacity when international
demand increased. This helped them make large profits.

Investment
The very first foreign direct investment in the Pakistan cement sector occurred in 2005. This
investment turned into what we now know as Pakland cement. It was the first plant to comply with
the European standards and exceeded the Pakistani standards by far.
The cement sector also attracted foreign investment of $41.4 billion in July-August 2007.
Cement sector has attracted above 80 million dollars foreign investment, depicting an upsurge of
577 percent during the first half of current fiscal year, industry sources said.

Government policies
Besides foreign investment made in the cement industry the government allocates a fair share of the
budget. In the year 2008 to 2009 almost 4.4% (646 million) of the budget was allocated to
development projects.

Taxes
As of 2007, Pakistan has one of the highest tax rates in the south-east region. Along with the 15%
sales tax, the industry has to pay the central excise duty. Other countries have comparatively very
low tax rates that are often considered to be negligible. In addition the industry also pays paying the
provincial levies (Royalty and Excise Duty) on acquiring of raw material for production of cement
i.e. limestone and clay.

Transportation
With the rise in demand for exports, the problem being faced by Pakistan is our transportation
system

Demand of cement
Exports
At the moment, Pakistan is exporting the following processed and intermediary products:

Sulphate Resistant Cement (SRC)

Ordinary Portland Cement (OPC 42.5 N/R)

Clinker ( exported to the milling units of various countries)

Slag Cement
The major importers of Pakistani cement are:-

Srilanka

Russia

Afghanistan ( Major cement importer for Pakistan in 2008)

Iraq

United Arab Emirates

South Africa

India

Djibouti

Qatar

Reasons for the increased international

demand for Pakistani cement:

India and china is currently facing a shortage in its cement production facilities while Pakistan
has abundant production facilities with excess capacity.

India has also significantly decreased its imports of Pakistani cement following the
Mumbai attacks. However, it has resumed position in recent years. Better relations with
India have led India to import more Pakistani cement thus increasing the figure for total
demand. India has also let go of the custom duty (of 12.5%) that it had placed on Portland

cement imports. Also, Pakistan has increased the number of trains which carrying its
cement to the Waghah border.

Increase in the demand of Pakistani cement in Asia, Middle East, Africa and India, afgahnistan

Due to Pakistan having all the necessary raw materials needed to produce cement,
countries view Pakistani cement to be of good quality and find it to be a safer option as
compared to the cement of other countries.

The decline and ultimate shutdown of major production facilities and units in European areas
due to stringent regulations circling around environmental health and pollution monitoring.

Pakistani cement is perceived in the world as high

quality cement. Quality of limestone available in
Pakistan is the best in the world. Also, we export
high quality Ordinary Portland Cement (Grade 42.5
N/R), Sulphate Resistant Cement (SRC), Slag
Cement and White Portland Cement from Pakistan.
The top quality Pakistani cement not only meets but
also surpasses several international standards like:
We export cement which is certified to meet quality
& standards of many countries including South
Africa, India & Srilanka. Our plants maintain
Uniformity, Strict Quality Control, ISO 14001 &
ISO 9001 certified and rely on SGS reports for their
high quality.

Last year local

consumption was 23 Million
M. Tons while exports were
10 million M. Tons. So there
is surplus capacity in
Pakistan at the moment and
this surplus may exist for
the next couple of years.
India is second largest
producers and consumers of
cement in the world and has
capacity somewhere around
250 million M. Tons.
-Lucky Cement

Pakistan is the supreme choice of most of

the cement importers as Pakistan is highly abundant in the raw materials required and had been
bestowed with highly impressive cement production facilities.

Improved access to the neighboring markets

Recently, India offers itself as a deserving candidate for the importer of Pakistani cement as the
Indian custom duty on Portland cement imports (duty of 12.5%) has been put to rest in 2007. India
intends to import more cement from Pakistan in order to breakeven and stabilize the demand vs.
supply gap that resides in the Indian economy. Also, India has successfully registered various
Pakistani cement manufacturers as this is a pre-requisite to smooth the process of the import of
cement. To top it all, Pakistan has rapidly increased the number of trains carrying cement from
Pakistan to the Wagah border.

China is importing huge amounts of Pakistani cement as in the month of May; china was
devastated by a wrecking earthquake of the magnitude of 7.8 on the Richter scale. Thus cement is
needed in large quantities to facilitate the rebuilding of the wrecked and devastated regions of china.

Increased demand for Pakistani cement by South Africa and Srilanka as South Africa imported
cement to build the football stadiums for the football world-cup of 2010 and Srilanka intend to
import cement from Pakistan as it is co-hosting the cricket world cup of 2011.
Causes of increased domestic demand for Pakistani cement

The construction of large dams in the country

Four large dams are currently being produced in Pakistan for which an extremely high
amount of cement will be required. 3.7 million tons of cement is required for the
building of the Skardu-Katzarah dam itself.
The reconstruction process occurring after and due to the recent floods.

Related and Supporting Industries

Mining Industry
Currently small scale development of around 52 minerals is in process. The major production is of
coal, rock salt and other industrial and construction minerals. The current contribution of mineral
sector to the GDB is about 0.5% and likely to increase significantly on account of expected
development and commercial exploitation of Saindak & Reco Diq copper and gold deposits (world
largest gold mine), Duddar zinc lead, Thar coal and gemstone deposits.
Therefore, the competitiveness resulting from the growing mining industry can be exploited by the
Cement Industry in Pakistan to attain cost effective and high quality inputs for its continuous
production process. Moreover, coal has become an important resource for the cement industry in
Pakistan. It is interesting to know that Sindh has one of the largest good quality lignite deposits in
the world. According to the Geological Survey of Pakistan, Pakistan is estimated to have a total of
185 billion tons of coal reserves. Out of this 184 billion tons are in Sindh. These coal reserves
located both in Thar and Balochistan must be exploited, since currently coal is being imported in
Pakistan.
Coal is found in all the four provinces of Pakistan. At present most of the cement
companies have switched to coal or gas as their basic fuel; the process has been completed in the
last 6 to 7 years. According to the data of the All Pakistan Cement Manufacturing Association of
Mid-2007, the cost of cement production per tonne by furnace oil was around Rs2, 083 whereas

the cost of production per tonne by coal was Rs8, 68, saving Rs1,215 per tonne. Similarly, the
saving per bag was Rs60.75, which is a huge difference and aids the competitiveness of the local
cement companies in Pakistan.
Construction Industry
The housing and construction sector in Pakistan plays a vital role in enhancing economic growth
and reducing unemployment.
Packaging And Transportation
There are different types of packaging that is used. Paper packaging is used for domestic
purposes whereas Standard Packaging Polypropylene bags are used to meet export
requirements so that moisture damage can be prevented.
Spare Parts
Spare parts contribute significantly to smooth operations of cement plants. By performing regular
service checks on vital equipment, ensuring staff is trained on preventative maintenance, and
providing a steadfast supply of high-quality wear parts, the availability of production lines is
ensured. High quality spare parts can help ensure optimum performance and cost effective
operations, especially for older legacy control systems.

Firm Strategy, Structure and Rivalry

There are four foreign companies, three armed forces companies and 16 private companies listed in
the stock exchanges. . The industry is divided into two broad regions, the northern region and the
southern region. The northern region has over 87 percent share in total cement dispatches while the
units based in the southern region contributes 13 percent to the annual cement sales. The structure
of Cement industry in Pakistan is that it has no any substitute. Which shows that the Cross elasticity
of demand is negligible. The increased price of cement is also due to energy resources which are
inflating rapidly. Firms are moving from furnace oil to coal as method of energy sources but this
coal is also imported. Considerable investment needs to be done in domestic coal mines so that our
industry is competitive globally in this one very achievable factor.

Lucky Cement

Sponsored by well known Yunus Brothers Group one of the largest export houses
of Pakistan, Lucky Cement Limited is presently a 21,000 Tons PerDay, dry process
Cement Plant.
Lucky Cement came into existence in 1996 with a daily production capacity of 4200
Tons par day, currently is an omnipotent cement plant of Pakistan, and rated amongst
the few best Plants in Asia.
With production facilities in Pezu (Production capacity: 13,000 Tons per day) as well

as in Karachi (Production capacity: 8000 Tons per day) it has the tendency to become
1
the hub of cement production in Asia.

D.G Khan

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.

Rivalry
The cement industry of pakistan is said to be an oligopoly
due to the number of competitors in the industry. There a
few major players who dominate the industry and own most
of the market share.

Market Share

Askari cement (NZP) 7.6%

DG cement 9.8%
Lucky cement 12.7%
Maple leaf 7.1%
Pioneer cement 5.5%

The biggest problem for Pakistani

exporters who are located in
North zone is the distance from
seaport. They have to incur
substantial inland freight to bring
down cement from upcountry to
Karachi Port. There isnt any
facility at port to handle loose
cement. Lucky Cement being the
largest has invested in its own
silos and infrastructure at port
while others can only export
bagged cement. Government
announced inland freight subsidy
for the last quarter of 2008-09 and
subsequently cement exporters
submitted their claims but not a
single rupees has been paid as yet.

Issues:

Issues and Recommendations

Pertaining To Economic Condition Of Pakistan

The Pakistani currency has been depreciating. This has caused a greater problem
to the industries who have taken loans in the foreign exchange currencies.

According to the federal bureau of statistics, Pakistan hit record inflation during 2008.
The SBP, in order to control the inflation, tightened the monetary policies by
increasing interest rates. The increase in the interest rates made the industries pay
more interest against the long term loans that they had borrowed at lower interest rates.
Federal Excise Duty and GST over Cement industry should be reduced.

1http://www.cement.com.pk/cement/pakistan-cement-industry/lucky-cement.html

Pertaining To Factor Conditions

Facilities at Pakistans ports are not

enough. Charges at Pakistani ports
are much higher as compare to port
charges in other countries. 19
cement plants are located in North
& 10 plants are in South zone. Due
to financial crisis four plants in
south has shut down their
operations. Inland freight is so high
for North plants for sea exports.
Additionally our nearest Gulf &
Middle East countries have installed
their own capacity for their domestic
needs. These are the reasons for
drop in sea exports.

The high fuel price is the most prevalent problem

faced by the manufacturing firms. . Nowadays about70%
cost constitutes the energy cost

The demand for coal is a derived demand which is

rising with the rise in demand for cement and in order to
meet this demand, the manufacturers cannot rely solely
on imported coal since it becomes very expensive.
Solution to the problem would be that the government
invests in coal reserves in Thar and Balochistan so as to
meet the growing coal demand.

Another solution to the above problem is the use of

Alternative fuels. The raw material is almost free of cost
but the production cost is significantly high. It requires
painstaking separation of the calorific rich content, additional comminuting, foreign matter
release, homogenizing, storage, transport and feeding in the cement plant. 2Government
offers no disposal fees for getting rid of the waste. The MSW in Pakistan is considered
property of Municipal Authorities which intend to generate some revenue by selling it off
to interested third parties. Hence, action needs to be taken to ensure that companies using
MSW as a source of fuel achieve benefit for doing the environment and society a favour.

Transportation cost is very high, from North Zone to Karachi port. The cement
industry should enter into trade agreements with the transporters to receive discount.

Proper infrastructure is necessary for the transportation of cement. Government of

Pakistan should provide infrastructure to the cement industry to setup new factories.

Because of high interest rates and inflation, this sector is not very feasible for
investors. This proves to be an problem for smaller companies who cannot invest in new
machinery and continue to use the obsolete ones which ultimately results in a high total
cost.

Cement industry is the second most heavily taxed industries of Pakistan. Government
needs to revise its policies in order for them to be favourable to not only this sector but
also the supporting sectors so that they can reach their full potential and contribute to the
overall economy.
The issue of not operating at full capacity raises high concerns for many plant
owners. In order to avoid this, the companies need to explore new markets for export or be
ready to lower prices in the local market.

Pertaining To Demand Conditions

2 www.pakistancement.com

Amongst the many problems faced by the cement industry, keeping in view the
demand conditions the most grave problem that exists is the increase in freight charges.
In addition to this, the personnel also claimed that the other dilemma that the cement
companies of Pakistan face is the problem of transporting cement to various countries
and nations. This problem of logistics and the increasing costs of freight charges and the
storage costs of cement at the port makes it almost impossible for these Pakistani cement
to gain access and export cement to far-off countries.

Shortage of plastic bags in the country. Most of the importers of Pakistani cement
want the cement to be packed in good quality plastic bags as paper bags are more prone to
spoilage. However, in Pakistan only two companies are producing paper bags for the
cement companies and due to this many of the cement companies are still not able to
access the plastic and international markets do not accept cement in paper bags.

While transporting cement, weather conditions can impact cement quality. While
transporting cement within country normally transporter covers the cement with tarpaulin/
plastic cover to save it from Rain/ unfavorable weather situation.

Export rebates and trade exhibitions should be encouraged as to help Pakistani cement
receive international business; also this will help improve the perception of Pakistani
cement in the international arena.

Shortage of Electricity or power break down is a major constraint as the frequent

restoring to load shedding is causing an adverse effect on the trade and industry.

Pertaining To Related And Supporting Industries

Mining Industry

The future energy supply to the cement manufacturing plants is one of the main core
issues today. Initially energy was generated with furnace oil, but lately there has been a
rapid switch towards the usage of coal for energy generation purposes.

Experts recommend that the Government of Pakistan should invest in the coal
reserves of Thar and Balochistan in order to accommodate the future coal demand and to
cut down on their dependency on imports. Lucky Cement has already signed a
Memorandum of Understanding with Oracle Coal Fields, in the year 2010, to purchase
coal extracted from Thar Coal.

The foreign exchange, which is otherwise so heavily spent on coal imports, could be
used to explore alternative fuel sources such as scrap tyres and municipal waste to lower
the cost of energy generation in the cement manufacturing plants. It is forecasted that
alternative fuel sources could account for 25% of the energy consumed by the cement
manufacturing plants in Pakistan. For instance, Fauji Cement is already actively exploring
alternative fuels. It has successfully launched the countrys first RDF (refuse derived fuel)
system. Fauji Cement is pioneering the substitution of conventional fuel with scrap tyres

and RDF in Pakistan.3

Construction Industry

Although Pakistans construction industry contributes significantly towards the GDP

and employs about 9% of the total labor force, unfortunately, it is one of the most
neglected sectors of the country. The industry is characterized as more of a labor intensive
one, with moderately less use of mechanization. Therefore as compared to other industries
in Pakistan, such as manufacturing, the construction industry is considered backward
because of its relative lack of use of the latest advances in technology, management styles,
and procedures. Furthermore, construction projects in Pakistan generally run over time
and over cost schedules, do not necessarily meet expectations, and often require remedial
works due to construction defects. 4

In order to overcome these issues, necessary measures must be taken to promote

investment in Research and Development activities in the construction industry. Moreover,
Quality Control and Materials Testing Laboratories must be established to ensure high
quality construction projects. This could gather appreciation and attract foreign investment
in this particular sector of the economy.
Spare Parts Industry

Cement manufactures spend a considerable amount on procurement.5 They can reduce

their procurement spending by improving their sourcing of spares and equipment.
Packaging and transportation Industry

Pakistani cement companies export cement in paper bags because they are cheap as
compared to plastic bags. Currently, four ply paper sack bags are being used for packaging
purposes.
Companies face trouble because these paper bags are easily torn and lead to
considerable wastage.
Exporting cement in paper bags is against the International standards and companies
are forced to export cement in plastic bags. New Propylene bags, which are more durable,
have been developed but their relatively high cost is a de-motivating factor in promoting
its usage.

3 Cement Pakistan Company-www.cement.com.pk

APCMA
4 http://enpub.fulton.asu.edu/cement/cbm_CI/CBMI_Separate_Articles/Article54.pdf
5 Complete process of obtaining goods and services from preparation and
processing of a requisition through to receipt and approval of the invoice for
payment.

Pertaining To Firm Strategy, Structure, And Rivalry

Pakistans cement industrys capacity utilization is just 76%, yet it is the 5th largest
exporter of cement. It can easily become 2nd or 3rd if the energy cost in controlled.

Cement plants are capital intensive and hence require a lot of energy. If Pakistan is
able to tap alternative energy sources, it can not only become a major competitor of
cement export but domestically, the prices will also fall and increase development.

Since cement is a specialized product, requiring sophisticated infrastructure and

production location. So, most of the cement industries in Pakistan are located near/within
mountainous regions that are rich in clay, iron and mineral capacity. Structure of Cement
industry in Pakistan is as such that there is not much substitutability to buyers. Which
shows that the Cross elasticity of demand is negligible.

The Competition commission of Pakistan should keep a strict eye on fair trade
practices because cartelization unnecessarily exploits consumers. Consumers are forced to
purchase at a higher rate which brings the price to an unaffordable range for many people.

Pertaining To Human Resource

Shortage of qualified and skilled manpower at all levels is an important issue.

Availability of qualified and skilled manpower should be given priority by government.
The training facilities should be developed at fast track.

Another issue is lack of training facilities for the development of required human
resources. Proper workshops that are held under the supervision of experts so that
the practical knowledge is properly imparted to the labor. Human resource policies of
clients, contractors and consultants need improvement.

Inadequate research and development. Foreign and local experts should be hired to do
the research and development.

Limit use of IT in industry. Better machinery and management should be used to

become cost efficient and become competitive.