Page 43 - CCL AR 2017 Final

Directors’ Report to the Members

For The Year Ended June 30, 2017

The Board of Directors presents the 1,600,000 Production
annual report of the company along 1,400,000
with the audited financial statements 1,200,000
for the year ended June 30, 2017. (Tons) 1,000,000
800,000
OVERVIEW 600,000
A noticeable economic turnaround has been witnessed 400,000
by Pakistan over the last few years following the 200,000
implementation of a growth oriented agenda. The 0
economic policies being pursued by the present 2017 2016
government is having a positive impact on all major Clinker Cement
industrial sectors including cement, which remains one Sales
of the top performers in the country. Greater PSDP 90
spending by the government for development of 80
infrastructure network and initiation of work on CPEC 70
projects has resulted in a growth in the cement demand 60
in the country. Furthermore, rise in private sector (Percentage) 50
spending on construction of housing and commercial 40
projects has also boosted the demand for cement. 30
While domestic demand was strong and increased by 20
nearly 8%, exports declined by 21% mainly due to
drop in exports via sea and to Afghanistan. During the 10
year, the Pakistani cement industry grew by 3.71% over 0 2017 2016
last year. Domestic Sales 87% Domestic Sales 79%

PRODUCTION & SEGMENT WISE SALES REVIEW Export Sales 13% Export Sales 21%
OF YOUR COMPANY
FINANCIAL PERFORMANCE
Comparative production and sales figures are
provided under: Following an increase in cement dispatches, the sales
2016-17 2015-16 revenue of the company also rose by around 36% i.e.
(in tons) Rs. 2.57 billion over last year. During the year, there
was an increase in costs of production due to rise in
• Clinker production 1,518,520 897,440 international prices of coal and oil, which led to
• Cement production 1,489,489 1,042,450 increase in variable costs. Furthermore, the company
has also recorded depreciation expense and finance
• Domestic sales cost pertaining to Cement Line II, which were
(cement and clinker) 1,340,226 818,617 capitalized during the year. The company has started
• Export sales 204,226 218,528 to realize the benefits of economies of scale following
the expansion of cement line II. There was an increase
1,544,452 1,037,145 in the other income from last year on account of
receipt of dividend income on investments made by
the company, sale of scrap material, and reversal of
There was a 49% increase in the overall dispatches of provision made against Workers Welfare Fund made
the company from last year. Commencement of in previous years following the decision of the
dispatches from Cement Line II from January 2017 Honorable Supreme Court in favor of the taxpayers.
coupled with increased construction activities in the The company has availed the benefit of tax exemption
country has resulted in a 64% rise in the local cement announced by the government for investment in
sales of the Company. However, closure of Torkham Khyber Pakhtunkhwa and Baluchistan provinces for
border during the year for over a month, badly the Cement Line II and the tax provision has been
affected the exports of cement to Afghanistan, which made accordingly. For the year ended June 30, 2017
declined by 7% during the year. the company has posted a historical after tax profit of
Rs. 1.95 billion.

41
Annual
Report 2017