A PROJECT ON

FAUJI CEMENT COMPANY LIMITED

TO:

SIR SALEEM JAHANGIR MIRZABY:

MUHAMMAD NAEEM 3778MUHAMMAD USMAN 3763HASAN ALI MALIK 3765MUHAMMAD UMAIR KAYANI 3781MUHAMMAD FARRUKH NOUMAN 3762

FACULTY OF MANAGEMENT SCIENCESINTERNATIONAL ISLAMIC UNIVERSITY, ISLAMABAD.

INTRODUCTION

- THE ORGANIZATION:

A longtime leader in the cement manufacturing industry, Fauji Cement Company, headquartered in Islamabad, operates a cement plant at Jhang Bahtar, Tehsil Fateh Jang, District Attock in the province of Punjab. The Company has a strong and longstanding tradition of service, reliability, and quality that reaches back more than 11 years.

A VIEW OF FAUJI CEMENT PLANT AT JHANG BAHTAR

The cement plant operating in the Fauji Cement is one of the most efficient and best maintained in the Country and has an annual production capacity of 1.165 million tons of cement. The quality portland cement produced at this plant is the best in the Country and is preferred in the construction of highways, bridges, commercial and industrial complexes, residential homes, and a myriad of other structures needing speedy strengthening bond, fundamental to Pakistan's economic vitality and quality of life.

Fauji Cement Company Limited was sponsored by Fauji Foundation and incorporated as a public limited company on 23 November 1992. It obtained the Certificate of Commencement of Business on 22 May 1993. The Company has been setup with primary objective of producing and selling Ordinary Portland Cement (OPC). For the purpose of selection of sound process technology, state of the art equipment, civil design and project monitoring, local and foreign consultants were engaged.

The Company entered into a contract with World renowned cement plant manufacturers M/s F.L. Smidth to carry out design, engineering, procurement, manufacturing, delivery, erection, installation, testing and commissioning at site of a new, state of the art, cement plant including all auxiliary and ancillary equipment, complete in all respects for the purpose of manufacturing a minimum of 3,000 tpd clinker and corresponding quantity of Ordinary Portland Cement as per Pakistan/ British Standard Specifications. The contract came into force on 1 January 1994. Physical work on the project started in August 1994Commissioning activities started in May 1997 generally remained smooth and trouble free, which enabled first batch of clinker production on 26 September 1997 followed by cement production in November 1997.

Subsequently in 2005, the Plant capacity was increased to 3,700 tons of clinker per day i.e. 3,885 tons of cement per day.

- BUSINESS PATTERN:

The Company has been set up with the primary objective of producing and selling ordinary portland cement. The finest quality of cement is available for all types of customers whether for dams, canals, industrial structures, highways, commercial or residential needs using latest state of the art dry process cement manufacturing process.

- COMPANY’S MISSION:

FCCL while maintaining its leading position in quality of cement and through greater market outreach will build up and improve its value addition with a view to ensuring optimum returns to the shareholders.

- COMPANY’S VISION:

To transform FCCL into a role model cement manufacturing Company fully aware of generally accepted principles of corporate social responsibilities engaged in nation building through most efficient utilization of resources and optimally benefiting all stake holders while enjoying public respect and goodwill.

- COMPANY’S STRATEGIES:

We shall achieve our vision by maintaining high quality product, relentless pursuit of customer satisfaction, empowering FCCL employees to lead cement industry and achieve manufacturing excellence, producing superior returns to our shareholders.

- COMPANY’S VALUES:

CUSTOMERSWe listen to our customers and improve our product to meet their present and future needs.

PEOPLE

Our success depends upon high performing people working together in a safe and healthy work place where diversity, development and team work are valued and recognized.

ACCOUNTABILITYWe expect superior performance and results. Our leaders set clear goals and expectations, are supportive and provide and seek frequent feed back.

SOCIAL RESPONSIBILITY

We support the communities where we do business, hold ourselves to the highest standards of ethical conduct and environment responsibility, and communicate openly with public and FCCL employees.

- INVESTORS:

PATTERN OF SHAREHOLDING IS AS UNDER:SHARES PERCENTAGE

FAUJI FOUNDATION INCLUDING DIRECTORS

235,938,214 31.79

FFC 93,750,000 12.63FFBL 18,750,000 2.52FOTCO 18,750,000 2.52GENERAL PUBLIC 374,800,472 50.51TOTAL 741,988,686 100

- MANUFACTURING PROCESS:

Fauji Cement is manufactured from best quality raw materials using dry process. Major portion of such raw ingredients consists of Limestone and Clay. The raw materials are quarried, crushed and corrected. After which they are mixed in the correct proportions to form the best raw mix. The raw mix is then ground in a raw mill and subsequently burnt in a rotary kiln at a temperature around 1450 °C. The raw materials under go a number of complex chemical reactions in the burning phase and leave the kiln as cement clinker, consisting of agglomerate of clinker

minerals. Finally the clinker is ground to a fine powder called cement, in a Cement Mill together with 4-6% gypsum. The gypsum serves to retard the setting time of the cement, which would otherwise harden, immediately with the addition of water.

COMPETITORS:

Following are some important competitors of Fauji Cement.

- Lucky Cement- Bestway Cement- D.G. khan Cement

STRUCTURE:

The company’s management structure consists of Board of Directors, Committees and Company’s Management.

- BOARD OF DIRECTORS:

Lt. Gen Hamid Rab Nawaz, HI (M) (Retd) ChairmanLt. Gen Javed Alam Khan, HI (M) (Retd) Chief executive/MDMr. Qaiser Javed DirectorMr. Riyaz H. Bokhari, IFU DirectorBrig. Arif Rasul Qureshi, SI (M) (Retd) DirectorBrig. Rahat Khan, SI (M) (Retd) DirectorDr. Nadeem Inayat DirectorBrig. Liaqat Ali (Retd) DirectorBrig. Munawar Ahmed Rana (Retd) DirectorBrig. Shabbir Ahmed (Retd) Company Secretary

- HUMAN RESOURCE COMMITTEE

Dr. Nadeem Inayat PresidentMr. Qaiser Javed MemberBrig Liaqat Ali (Retd) MemberBrig Shabbir Ahmed (Retd) Secretary

- AUDIT COMMITTEE

Mr. Qaiser Javed PresidentMr. Riyaz H. Bokhari MemberBrig Rahat Khan (Retd) MemberDr. Nadeem Inayat MemberBrig Shabbir Ahmed (Retd) Secretary

- TECHNICAL COMMITTEE

Brig Rahat Khan (Retd) PresidentBrig Arif Rasul Qureshi (Retd) MemberBrig Liaqat Ali (Retd) Member

Mir Khawar Saleem, Director (Project) Secretary

- COMPANY’S MANAGEMENT:

PRODUCTS AND SERVICES:

Fauji cement is currently producing only Ordinary Portland Cement (OPC), having PS:232-2008 ® : 53 Grade.

- INGREDIENTS:

- Clinker 95%- Gypsum 5 %

In making its Products, Fauji cement meets the requirements of Following international Standards:

- ASTM-C-150, Type I- BS EN-197-1, Strength Class 42.5 N

SALES:

Following is the Sales of Fauji Cement for Last 10 years:

YEAR SALES (in Millions)

2009 5314.5382008 3,545.9022007 3,463.2832006 4,286.1382005 2,845.1432004 2,296.2312003 1510.7382002 1586.6062001 1575.6042000 1696.5811999 1340.411

In the Table You can see that Sales was increasing continuously from 1999 to 2006, then their was decline in 2007 and 2008, but Fauji cement has Significantly increased it sales and reached to Rs. 5314.538 Millions.

GRAPHICAL REPRESENTATION OF SALES

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NET PROFIT:

Following is the Net Profit of Fauji cement for Last 10 years.

YEAR Net profit (in Millions)

2009 1007.6232008 413.5982007 646.3232006 1203.7352005 510.4902004 314.1482003 (531.381)2002 (110.480)2001 (570.455)2000 (282.974)1999 (562.901)

In the Table , you can see that from 1999 to 2003, Fauji cement was in loss, In 2004, company recovered and earned Rs. 314.138 Millions as Net Income, Up till 2006,

Company’s net Income was increasing with a significant Pace, and reached 1203.735 Million, but afterwards Net Income again start decreasing. In 2009, Fauji cement Earned Rs. 1007.623 Millions as Net Income.

GRAPHICAL REPRESENTATION OF NET INCOME

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ANALYSIS OF CUSTOMERS AND DEMAND

FAUJI CEMENT CUSTOMER’S VALUE:

“We listen to our customers and improve our product to meet their present and future needs.”

Fauji Cement Company supplies cement throughout Pakistan especially in the provinces of Punjab, AJK and NWFP through extensive dealer’s network.

Due to its strength, Fauji cement is a first choice for all hydro electric power projects and projects which specially requires strength and durability to overcome structural problems.

Due to its strength, Fauji cement is used in many mega projects some of which are as under:

- Motorway (M1-Project, Islamabad-Peshawar)

- Bahria Town / Safari Villas, Rawalpindi City - Pak Gulf Construction Pvt Ltd (CENTAURUS)- Karakorum Highway (KKH Project) Islamabad- Dong Fang Electric Corp, Batagram, NWFP- Yucel Turk Const (Pvt)Ltd, Mansehra City- Sino Hydro Power Project, Duber Khwar, Bisham Swat City- Siyahkalem Engineering,Construction Company, Muzaffarabad City- Essem Hotel and Serena Hotel, Islamabad.- Malakand (Dargai) Hydro Power Projects- Army Housing Schemes - Air Force Housing Schemes - National Logistic Cell Projects- Fauji Foundation Projects- Agha Khan Development Network, Muzaffarabad City.- Projects of Izhar Group of Industries.- Mineral Development Project, Islamabad.- A Q Khan Laboratory, Rawalpindi City- National Highway Authority Projects- Shifa International Hospital, Islamabad.- Habib Rafique (Pvt) Ltd, Islamabad.- CGGC- CMEC- NJ (Neelum Jhelum Hydro Electric Power Project),

Muzaffarabad City- Mangla Dam Raising Development Project.

EXPORTS:

Due to its strength and better marketing, Fauji cement is also in demand in foreign countries. Fauji Cement is one of the major exporters of cement to Afghanistan, with an effective presence in all cities. Their dealer’s network effectively cover the markets of Jalalbad, Kabul, Northern Afghanistan (Kunduz-Mazar Sharif and surrounding areas) and other markets of Afghanistan.They also export to Tajikistan and India.

FUTURE PLANS FOR LONG TERM GROWTH

REFUSE DERIVED FUEL (RDF):

In pursuance of its commitment to produce cement under stringent environment friendly conditions, Fauji Cement Company Limited (FCCL) has taken the lead by installing first ever Refuse Derived Fuel (RDF) Processing Plant at a cost of Rs. 320 Million.

NEW LINE OF PRODUCTION WITH CAPACITY OF 7200 TONS:

To meet the future challenges of Cement Industry and Country's future demand, FCCL has planned to install a new line of production with an installed capacity of 7200 tons

clinker per day in parallel with the existing line.

In this regard services and supply contracts have been signed with world famous German Cement Plant manufacturer i.e. Polysius (ThyssenKrupp) Germany, ABB Switzerland (Electrical equipment & PLC), Haver & Boecker (Packing Plant) and Loesche GmbH Germany (for vertical cement mills). The contracts have been made effective from 1st October 2007.

Contract with M/s Descon Engineering Limited for civil design, civil works of whole plant, local parts fabrication, erection and commissioning was signed effective from 1st Dec. 2007, 85% civil works has been completed, mechanical erection 10% has been completed & Elect. Erection work has just started, 98% of imported equipment has arrived at FCCL Site. The project is moving as per schedule commissioning of plant will be started "Insha Allah" by May 2010.

98% of imported equipment has arrived at FCCL site. Mechanical erection has also been geared up recently. The project is moving as per schedule. Commissioning of plant will be completed "Insha Allah" by May, 2010.

CAPTIVE POWER PLANT:

6 MW power plants have been commissioned in the month of July 2007 and are operating successfully.

NEW CAPTIVE POWER PLANT:

1. A new captive power plant is under progress. In this regard Supply and Services contracts for 16.3 MW dual fired (Gas + Oil) power plant was signed with M/s Wartsilla Finland.

Engine and other accessories have arrived at FCCL plant and erection of power plant is in process.

Civil work was awarded to Descon Engineering Ltd and local fabrication and erection of mechanical equipment to M/s Wright Engineering Co (PVT) Ltd. Electrical erection work has been awarded to M/s Power Engineering Co.

16.3MW duel fuel Power Plant has been erected & commissioning of Power Plant is in Progress.

Duel Fuel engine model 18V50DF is supplied by Wartsilla Finland & can be operated on HFO & Natural Gas / LFO.

Power Plant will be commissioned “Insha Allah” by end December 2009.

2. 3x2MW Gas Engine already functioning at Fauji Site since July 2007.

RECOMMENDATIONCOMPARISON WITH COMPETITORS:

Following is the comparison of Fauji cement with its competitors i.e. Bestway Cement, Lucky Cement and D.G Khan Cement.

YEARSALES

FAUJI CEMENT

BESTWAYCEMENT

D.G KHANCEMENT

LUCKYCEMENT

2009 5314.538 14814 18038209 263302008 3545.902 7487 12445996 169582007 3463.283 5649 6419625 125222006 4286.138 4544 7955665 79852005 2845.143 3536 5279560 3980

YEARNET INCOME

FAUJI CEMENT

BESTWAYCEMENT

D.G KHANCEMENT

LUCKYCEMENT

2009 1007.623 974 525581 45972008 413.598 169 (53230) 26782007 646.323 52 1622471 25472006 1203.735 1226 2418455 19362005 510.490 931 1682078 827