DG Khan Cement

DG Khan Cement Company Limited (DGKC) is currently in the process of exporting 50,000 tonnes of cement to the US, previously an untapped market. This may increase the company’s annualised export sales by 0.6 million tonnes. The US roughly meets 15 per cent (around 16 million tonnes) of its domestic cement demand of 107 million tonnes through imports, as per the 2021 figures. DGKC is estimated to export 1.5 million tonnes versus the record export sales of 1.9 million tonnes in FY21.

The company is primarily engaged in the production and sale of clinker, ordinary Portland cement and sulphate resistant cement. It is progressive and its track record is witness to it. It has created, developed and improved stringent and efficient systems in all areas. Ethics are core to it. The company is compliant to all the applicable laws, regulations and standards.

DGKC is a part of the Nishat Group. Nishat is a Pakistani business conglomerate group. It has a diversified presence in various sectors. All its entities are run by professionals on update business practices in compliance with the national and international regulations. Its market capitalisation as on June 30, 2021 is around Rs311 billion (around $1.9 billion). The group’s regular employees are more than 43,000. As on June 30, 2021, 60.8 per cent of the group market capitalisation was occupied by the banking sector; cement, 16.6 per cent; textiles, 10.5 per cent; power, 7.4 per cent; and insurance, 4.7 per cent.

Political situation in the country is in turmoil. Although the new government has been formed, still uncertainty lies because of its very thin majority, strong opposition and its own future plan of action. The government is also trying to make popular decisions (in terms of fuel and energy prices). This may put pressure on the fiscal side.

On the external front, foreign exchange reserves are on the downward trajectory because of unbearable pressure on the current account deficit on account of high global fuel prices. Conflict in Eastern Europe and the political economic tensions coming out of it are engulfing the world. All these factors are putting pressure on the rupee/dollar parity.

All these are pointing to high inflation in the coming days. Whole of this cost pressure is expected to be passed on to the consumers, otherwise it may squeeze DGKC’s margins. The State Bank of Pakistan (SBP) also proactively increased the discount rate by 250bps to slow down growth.