FCCL approves amalgamation with Askari Cement

The Board of Directors (BoD) of Fauji Cement Company Limited (FCCL) has approved a Scheme of Arrangement for the amalgamation of Askari Cement Limited, which is part of Fauji Foundation, with it, announced the company on Thursday.

In a notice sent to the Pakistan Stock Exchange (PSX), in accordance with the scheme, the entire Askari Cement Limited undertaking together with all its properties, assets, rights, trademarks, patents, liabilities and obligations will be transferred to and will vest in FCCL.

The “share swap ratio has been determined as 5:1 (5 shares of FCCL for every one share held in ACL), and ACL will be dissolved without winding up.”

The cement maker informed that the scheme will be processed in accordance with Section 279 and 282 and 285 of the Companies Act, 2017 for the sanction and appropriate facilitating orders of the Lahore High Court, Rawalpindi Bench.

Cement’s pecking order

Fauji Cement Company initially started with a production capacity of 3,700 tons per day that has grown to 11,000 tons. It also has two Waste Heat Recovery Power Plants (WHRPPs) of 12 MW and 9 MW, one set up in 2015 and another in 2018.

During the first quarter of FY22, FCCL earned a profit of Rs1,359 million as compared to Rs696 million in the same period last year. Sales stood at Rs6,936 million as compared to Rs5,501 million in the corresponding period last year, an increase of 26%.

Meanwhile, Askari Cement Limited has two plants at Wah and Nizampur, with a total production capacity of 8,925 tons per day. The company is currently exporting to Afghanistan. In the past, it has exported to India, South Africa, Central Asian Republics, and Sudan.

"While FCCL has an outstanding capital of 1,379.815 million shares, as per two year old accounts of Askari Cement, the company has issued 160 million shares to its existing owners. Under stated swap agreement, AGL shareholders will be issued 800.493 million new shares of FCCL," said Arif Habib Limited (AHL), in its report.

"Post-merger, FCCL's share capital will go upto 2,180.309 million shares. This however, should not be worrying."

"Pertinently, Askari has an annual capacity of 2.80 million tons against FCCL's current capacity of 3.43 million tons. This implies an 82% addition to current capacity, which, together with FCCL's announced Greenfield expansion of 2.05 million tons in North (D.G.Khan,Punjab) and ACL's brownfield expansion of 2 million tons, will render FCCL to become the third largest player in the country with a capacity of 10.3 million tons," it added.