Fecto Cement keen to buy Dewan’s northern plant

KARACHI: FECTO Cement Limited has announced to participate in the bidding for sale of assets of Dewan Cement Limited (northern plant), a bourse filing said on Tuesday.

Fecto Cement company secretary Abdul Samad said they would evaluate the information to be provided by the financial advisor of Dewan Cement for carrying out due diligence in relation to the prospective acquisition of the northern plant.

“The successful culmination of transaction will be subject to finalisation of commercial terms, completion of due diligence, execution of definitive agreement, and receipt of regulatory approvals,” Samad added.

Fecto Cement, a part of Fecto Group of Industries, posted a net profit of Rs899.636 million for the year ended June 30, 2015 against a net turnover of Rs4.779 billion.  Dewan Cement has already permitted a Chinese company to start due diligence for a possible acquisition of its stake.

The company has two production facilities; one in southern Pakistan near Karachi at Deh Dhando, Dhabeji, Sindh and the other in northern Pakistan near Kamilpur Hattar Industrial Estate, District Hattar Khyber Pakhtunkhwa.

The northern plant, being close to the GT Road, covers Punjab, KP, and Azad Kashmir in the local market, and Afghanistan and India in the export market, while the southern plant covers Sindh and Balochistan in the local market, and proximity to the ports at Karachi facilitates exports to markets of Sri Lanka, Africa, and the Middle East.

It may be mentioned here that local cement demand is expected to increase by 15 percent per annum in the next few years, with higher government development spending and the CPEC infrastructure projects kicking in. In light of these demand movements, cement players are fast expanding their capacities, and adding on alternative power generation features to further reduce costs.