KARACHI: Cherat Cement Company Limited (CHCC) expects to complete its takeover of NICL (Nimir Industrial Chemicals Limited) in the coming months, with its ownership stake projected to reach approximately 70 to 75 percent, including the tender offer.
According to takeaways from the company’s analyst briefing, under the proposed acquisition, NICL’s existing management is expected to retain around 15 percent ownership. Cherat Cement plans to finance the remaining consideration through a seven-year syndicated loan from two local banks at what management described as attractive rates, alongside approximately Rs16 billion in cash and short-term investments.
NICL generated revenue of around Rs48 billion and profit of approximately Rs2.3 billion in the previous year. Cherat Cement aims to improve the company’s operational efficiencies and pursue opportunities in value-added products.
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Management remained optimistic about domestic cement demand, citing public-sector spending, the prime minister’s subsidised housing finance scheme and private housing activity as potential supports. However, it cautioned that rising inflation and interest rates, geopolitical tensions, energy-price volatility and regional trade disruptions could weigh on demand momentum.
On the fuel front, local Thar coal accounted for approximately 72 percent of Cherat Cement’s total coal consumption in FY26. Imported RB2 coal was currently priced at around USD 150 to USD 154 per tonne on a cost-and-freight (CFR) basis, while local coal was quoted at approximately Rs60,000 to Rs61,000 per tonne.
Coal costs averaged around Rs41,000 per tonne in FY26. Current imported coal prices stood at approximately USD 150 per tonne CFR, while delivered local coal costs had increased to Rs61,000 to Rs63,000 per tonne. The company maintains coal inventory equivalent to around 1.5 to 2 months of consumption, purchased at lower prices. Management expects higher coal costs to gradually flow through to production costs.
Management attributed the increase in cost per tonne to Rs12,295 in 4QFY26 to lower dispatches following the closure of the Afghan border and higher stores consumption. The cost per tonne subsequently improved to approximately Rs11,300 in 1QFY27.
Renewable energy sources, including solar and waste heat recovery (WHR), supplied around 55 percent of the company’s total power requirements. Hydropower sourced from PEDO accounted for approximately 15 to 20 percent of power consumption at around Rs15 per kilowatt-hour, significantly below grid tariffs of approximately Rs29 to Rs39 per kilowatt-hour.
The company’s additional 5-megawatt solar project is expected to become operational by December 2026. Meanwhile, the 25-megawatt battery energy storage system (BESS) has been delayed to 3QFY27 due to supply-chain disruptions.
Cherat Cement’s average domestic retention price stood at Rs16,000 to Rs16,500 per tonne in FY26.
Copyright Business Recorder, 2026