Farhan Sharif, Bloomberg
Karachi: Lucky Cement Ltd, Pakistan’s biggest maker of the building material plans to ship as much as 200,000 metric tons of cement to India in the next 12 months to take advantage of a supply shortage in South Asia’s biggest economy.
“A team from the Bureau of Indian Standards will visit our plant soon to conduct a quality control test required by the government before allowing imports,” Abdul Razzaq Thaplawala, executive director at Karachi-based Lucky Cement said in a phone interview from Karachi yesterday.
India, the world’s second-most-populous nation, plans to invest $320 billion (Rs13,10,727 crore) on roads, ports, dams and power stations by 2012. Cement makers are investing Rs450 billion ($10 billion) on adding almost 100 million tons of capacity, the government said on 6 March.
“Exports to the Middle East and Afghanistan account for most of Pakistan’s cement sales overseas but exports to India are likely to overtake soon,” said Haris Dagia, research analyst at JS Global Capital Ltd, in Karachi.
Pakistan’s cement exports doubled in the 10 months ended 30 April, because of higher demand from Afghanistan, India and the Middle East.
Pakistan sold 2.45 million metric tons of cement overseas in the July-to-April period, compared with 1.21 million metric tons a year earlier, according to the Lahore-based All-Pakistan Cement Manufacturers Association.
“Lucky is well-placed to match the quality required by the Indian quality control authority,” said Khurram Schehzad, research analyst at Invest Capital and Securities Ltd, in Karachi.
Lucky shipped 125 metric tons of cement to India in April on a trial basis.
Pakistan is ready to export cement, following a duty reduction announced by the Indian government, said an 4 April statement from Prime Minister Manmohan Singh’s office in New Delhi. India and Pakistan began rebuilding ties in 2003 after they came close to fighting a fourth war in 2002 over Kashmir, a Himalayan region divided between the two countries since 1947 and claimed in full by both.
India can produce 171 million metric tons of cement a year, 18.8 million tons less than demand, said a 2 February report by Invest Capital & Securities Ltd.
Pakistan is expected to produce a cement surplus of as much as 15 million metric tons in the year ending 30 June, Dagia said. The government ended a ban on cement exports on 28 September 2006.
Lucky increased its production capacity to 6.4 million metric tons a year, from 2.7 million metric tons a year ago to meet rising demand domestically and in the region, according to Invest Capital.
In the year ended 30 June 2006, Lucky exported 335,000 metric tons of cement, more than a fifth of Pakistan’s overseas shipments of the building material.
Lucky’s shares, which have risen 71% this year, fell 0.4% to Rs102.50 at the 2:15 pm local time close on the Karachi Stock Exchange. The stock rose as much as 1.7% earlier.
The company’s third-quarter profit rose 12% to Rs553.7 million in the three months ended 31 March, the cement- maker said on 23 April.
Pakistan’s sales of cement domestically and overseas, climbed by a third to 19.71 million metric tons in the ten months ended 30 April, from 14.85 million tons a year ago, the association said.
Pakistan’s demand for new houses is estimated at 500,000 units a year, the government said in June. Cement sales are also expected to rise as the government increases spending on roads and bridges.
The government allocated a record 435 billion rupees for the development of infrastructure in the budget for the year that started 1 July. Plans to build five major dams by 2016 to meet electricity and water shortages will also boost cement demand.
— With reporting by Archana Chaudhary in Mumbai