Thatta Cement befriends Sri Lanka

Thriving in the domestic market with soaring local dispatches, cement manufacturers in Pakistan have been eyeing foreign lands to set up manufacturing plants and increase their presence. Last August, Lucky Cement announced plans to set up a million-ton capacity in the Democratic Republic of Congo in Africa. Latest in the industry to publicize similar plans is Thatta Cement - a small player in the southern region. The company plans to set up a cement grinding and packaging plant at the Sri Lankan port, whereby clinker will be imported from, preferably, Pakistan, or any other country where a more feasible price can be afforded. The grinding of clinker, and packaging into bags will be carried out at the Sri Lankan port. The rationale for setting up a plant in Sri Lanka rather than simply exporting the final product to the country was savings in handling and transport costs, according to company officials, since clinker is transported in bulk, while cement has to be transported in packaged bags that need to be handled with care. Initially, the company is supposed to produce around 100,000 tons of cement annually through this plant, which is expected to go up further in later years. The production is expected to cater to about 3 percent of demand in Sri Lanka. The country currently consumes around 4 million tons of cement annually, about 3/4ths of which is met through imports, majorly from Pakistan. Post-war reconstruction means demand for the product has been rising steadily, with the Sri Lankan industry expecting the pace of demand growth to rise even more in the years to come. The price of cement in Sri Lanka currently hovers around Pakistani Rs600 per 50 kg bag, while in Pakistan it nets at about Rs425 per 50 kg on average. This hints at prospective profitability of Thatta Cements venture. The time frame as regards the commencement of operations, mode of financing, project costs and other details have not been made public yet, neither has the decision on a possible Sri Lankan partner company to be associated with the project. Thatta Cement is hopeful that the initiative will bring up the companys capacity utilisation, which is currently better than the industry average at about 80 percent annually for the past 2-3 years. The effort by a small local manufacturer in venturing abroad is a laudable one. The cement industry, overall, deserves credit for being an industry thats taking steps for increasing Pakistani companies presence globally.