The News reported that under a strategy to make its presence possible in the lucrative developing markets of Africa and Asia, Lucky Cement has now approached the Indian government to acquire details about setting up a cement production plant in Indian Punjab. Lucky Cement expressed the hope that it will take the company roughly 12 to 18 months to kick off the project.
Mr Muhammad Ali Tabba COO of Lucky Cement said that "The company has approached Indian government to know as to what is its policy to welcome direct investment from Pakistan in its cement sector. This is just the beginning and may take a long time of around one and a half years to initiate the project in India if the company finds the project feasible."
Reportedly, India has lifted a ban on foreign direct investment from Pakistan about three months ago after the two countries agreed to strengthen economic ties. Roughly, the company annually exported around 100,000 tonnes of cement to India in recent years. The company claims that it is the largest cement producer of Pakistan with an annual production capacity of 7.75 million tonnes.
The official said that the company is also in the process of setting up a production plant in Sri Lanka. The project in Sri Lanka is in advanced stage. As soon as we get land and licence from the Sri Lankan government we will initiate the project. Moreover, it has also initiated projects n Iraq and Congo, Africa in recent times.
Lucky Cement is a listed company at the Karachi, Lahore and Islamabad stock exchanges. Its share price fell by 17 paisas to PKR 141.66 on a turnover of 564,200 shares at the KSE on Monday.
According to profit and loss accounts said that lucky Cement Limited declared a profit after tax of INR 2.01 billion for the quarter ended September 30th 2012 which was 34% higher than PKR 1.50 billion earned in the same quarter last year.
The CEO said that the company would probably set up the plant in Indian Punjab as the territory offers higher opportunity of doing business in the sector against highly competitive Gujarati markets. An Indian business newspaper, Mint (Hindustan Times' affiliate) reported that Lucky Cement is exploring possibilities to establish the unit in the Amritsar (North Western region).
Moreover, the company might export clinker to its to be Indian plant and then convert it into finished brand there. It was yet to be finalized as the Lucky Cement would establish the plant all alone or it would enter into JV there with a local partner. Options, in this regard are still open. The company is to determine the size of funds to be invested there. The investment in India would be a mix of equity and debt.
Mr Muhammad Rehan Khan an analyst at First Capital Equities said that Lucky Cement has successfully established its brand in the Indian market while the management of the company has also repeatedly highlighted the lucrativeness of Indian cement market, owing to its huge area and growing middle class. If pursued, this project is likely to be a prudent growth initiative by the management.