Whats in store for DGKC in Sri Lanka?

Amid escalating freight cost and highly saturated domestic cement market, Pakistani cement manufacturers are either planning to install manufacturing capacity at a place closer to sea ports or expanding their manufacturing capacity beyond Pakistan to those foreign countries, where cement industry doesn produce enough to meet its demand.
A few months after top cement producer Lucky Cement expressed its intentions to set up a plant somewhere in Africa, DG Khan Cement, another leading manufacturer, has disclosed its plans to expand its outreach.
DGKC plans to set up two plants costing $360 million; one at Hub Town near Karachi - a place closer to sea port - with a capacity of 3 million tons to target African market and another in Sri Lanka with a capacity of 2 million tons.
Setting up a plant near a sea port would undeniably open its doors to export avenues through inexpensive sea routes, because the companys two former plants located in northern part of the country make exports expensive. Company sources reveal that it takes about $15 per ton to transport cement from plants to sea port for overseas sales which typically increases the cost of sales by many bounds.
The more interesting part of the story, however, is why Sri Lanka? First, there are very few cement manufactures on the Indian Ocean island leaving the country largely dependent on cement imports. Second, the country has a positive population growth - meaning steady demand for housing and business - and an impressive GDP growth, which is expected to be 5 percent next year, according to IMF outlook.
Third, the end of decades old ethnic clashes has left an infrastructural gap which is likely to attract foreign investments. In fact, Sri Lanka is being widely quoted as the Hong Kong of India by financial pundits in global banking circles.
The pace of development can be gauged from the fact that forty of the Fortune 500 companies in the USA have already expressed their willingness to invest in Sri Lanka in support of the countrys effort to reconstruct and rebuild, according to the countrys government officials quoted in Sri Lankan media.
Finally, Sri Lankas close proximity to eastern part of India and Bangladesh, which are big cement importers, would give DGKC a healthy export advantage. Although, cement capacities are being expanded in India, it is still considered an attractive destination for cement exports owing to high population and economic growth.
Knowing these exciting indicators, many Pakistani cement exporters are considering Sri Lanka as most lucrative overseas destination, where DGKC alone is currently exporting more than 10,000 tons of cement per month on an average.
The only glitch is that DGKC will have to be extremely competitive on pricing without compromising on quality as low-cost Chinese cement has already captured a large chunk of Asian market. And given that the worlds leading cement exporting countries - such as China, Thailand, Japan, Taiwan, Pakistan - are located in the region, only those manufacturers would survive in the long-run who are benefiting from low cost energy resources.