PACRA Maintains Entity Ratings of Gharibwal Cement Limited

Lahore, March 29, 2023 (PPI-OT): Gharibwal Cement (the Company) has annual production capacity of 2.1mln tons. The Company has been conducting its business by selling cement to the localities located in close vicinity to the plant located in Ismail Wal District Chakwal. Gujranwala division remained the Company’s key market. The cement sector latest period 1HFY23 reported a reduction of 17% in cement production reflecting on economic downturn.

Increase in prices of all the construction materials has impacted demand for cement as well. Going forward, the same trend is expected to continue throughout the remaining fiscal year owing to economic constraints and political uncertainty. The company recorded a decrease of 5.2% in total dispatches for FY22.

Though the Company observed volumetric decrease in cement dispatches during FY22 but its topline has improved to PKR 16.193bln owning to incremental selling prices (FY21: 12.17bln). Therefore, showing a significant increase (33%). Similar trend was noticed in the first quarter ended Sept 2022 (1QFY23: PKR 3.82bln, 1QFY22: PKR 3.18bln).

The Company has equity base of PKR 16.8bln whereas it’s leveraging stands at 6.7%. The overall margins of the company also improved as compared to FY21 owing to better retention prices. In order to curtail the increasing energy prices, the Company has completed the construction and operations of Waste Heat Recovery (WHR) plant that generates electricity up to 12MW from waste hot gases of the process and 8MW from coal fired system.

Keeping the current phase of expansion in view, Gharibwal is working on its line II expansion project to expand its current capacity by 10,000 TPD in order to maintain their market presence in the industry. The financial profile remains adequate as long-term leveraging expected to increase if expansion would be financed with debt mix. The ratings draw comfort from sponsor families, having prime focus of the company.

Industry’s dynamics encompassing infrastructure development hence rising local demand is seen as an opportunity for the cement manufacturers. The ratings are dependent on upholding the company’s business vis-à-vis financial risk profile in the current economic scenario.

For more information, contact:
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425