dg cement internship report
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DESCRIPTIONInternship report on DG Cement including Company Profile, Business Process, Hierarchy, Departmentalization, SWOT Analysis......................All of u guys your comments are appreciated after reading that report...hope this will help you a lot..........i guess change in formatting has troubled the integrity of the report.
CONTENTSPreface………………………………………………………………………………….01Acknowledgement…………………………………………………………………..…02Executive Summary…………………………………………………………………....03Industry Profile………………………………………………………………………...04 Govt. Attitude Towards Sector…………………………………………………......09 Industry During FY 2009…………………………………………………………...10
Company Overview……………………………………………………………………12Company Profile……………………………………………….....................................14 Nishat Group………………………………………………………………………..15 Acquisition of DGKCC by Nishat Group………………………………….............15 Brands…………………………………………………………………....................16
Friendly Environment………………………………………………………………...17 Measures Taken in Protecting The Environment…………………………………...17 Capacity Addition…………………………………………………………….........17 Environmental Management……………………………………………………......19 Future Outlook……………………………………………………………………..22 Mission and Vision Statement……………………………………………………..23
Business Process………………………………………………………….....................24 Steps of Production…………………………………………………………….......24 Flow Process of production………………………………………………………...27 Cost of Production………………………………………………………………….29 Decision Making……………………………………………………………………30
Hierarchy………………………………………………………………………………..32Departmentalization…………………………………………………………………….33SWOT Analysis…………………………………………………………………………35Tour to DGKCC…………………………………………………………………………41Problems Identification………………………………………………………………….43Recommendations……………………………………………………………………….44Conclusion………………………………………………………………………………..45Bibliography……………………………………………………………………………..46Appendix………………………………………………………………………………...47 Internship Offer Letter……………………………………………………………….48 Completion Letter…………………………………………………………………….49 Evaluation Form Employer…………………………………………………………...50
UNIVERSITY OF CENTRAL PUNJAB 1
Learning in practical side is somewhat that cannot be compared with books knowledge. BBA
program is designed in such a way that students are required to do the projects and researches
then give their recommendation and conclusion. It also provides student an opportunity to apply
this knowledge in practical field.
Now to fulfill the practical requirement of this course, I successfully completed an internship
report on DGKCC (Pvt). Limited a unit of Nishat Group. It was great opportunity for me to
apply theoretical knowledge and get practical exposure. I have visited almost all the departments
and studied function of each department at factory as well as at their head office in Lahore.
The purpose of the report is to elaborate on my experience about DGKCC (Pvt.) Limited. I have
tried to present the overview of the company and its operations and the task that are carried out
during my stay at DGKCC (Pvt.) Limited. Although 6 weeks is a small time to completely
understand the processes and philosophy of a company, but at least one gets a good overview
about it, and I have tried to write all that grasped during this short time, in this report. This report
includes DGKCC working way outs, information about their departments function and working.
I have analyzed their working and have given certain recommendations on the basis of my
observation. I have tried my level best to give real look about DGKCC while writing this report.
May ALLAH succeed me while evaluation of this report.
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My greatest thanks to Allah Almighty. Allah who bestowed me with the ability and potential to
complete this Internship. Before I go into thick of the things, I would like to add a few deepest
words for the people who were part of this report in numerous ways… people who gave
unending support right from the stage the report was assigned. Particularly I also wish to thank
the managerial staff at Nishat House who helped me to gain a lot of information regarding the
company and cement industry and also thankful to Mr. Inayat Ullah Niazi (CFO, DG Khan
Cement Company) who provide me an opportunity to learn and understand the working of
organization as an internee. I am also thankful to Mr. Elahi Buksh (Senior Manager Finince) who
played a role of polar star for me in the organization and whose experience taught me a lot about
the industry and the organization.
I am especially thankful to Mr. Mukhtar Ahmad (Senior Manager Production) who helped me a
lot in getting the knowledge of cement industry
And finally deepest and warmest appreciation to the whole team of DG Khan Cement Company
who helped me a lot in getting knowledge about the office working and about the cement plant at
the site in Khairpur.
UNIVERSITY OF CENTRAL PUNJAB 3
Dera Ghazi Khan Cement Company Limited is a strategic business unit of Nishat Group, which
is the largest industrial group in Pakistan. D.G. Khan Cement Co. is market leader with respect to
market share with about 11.4% market share. Apart from its competitors; its product is high
priced yet it has highest market share because of good quality. Its plant is situated in Dera Ghazi
Khan and KhairPur and head office is situated at Lahore. Factory site Unit 1and 2 that is situated
in very remote area of Punjab, yet it proved a blessing for the company. Because it has all three
basic raw materials i.e. Lime stone, Shale, and Gypsum at one place. It has three plants working
two in D.G. khan and one in KhairPur. First plant is old one and it is Japanese plant. The other
two plants are of F.L.Smiths, Denmark. Presently it has a total Installed capacity of 14000 tpd
(tons per day).
Presently the company is also exporting the cement to Afghanistan, Iraq, UAE and Russia. The
team of the D.G. Cement is story of success of D.G. Cement. The whole team is self-motivated
and had played a vital role in the success of the company.
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The history of cement industry in Pakistan dates back to 1921 when the first plant was
established at Wah. At the time of independence in 1947 there were four cement factories with
an installed capacity of 470,000 tons per annum. These units were located at Karachi, Rohri,
Dandot and Wah. In 1956 Pakistan Industrial Development Corporation (PIDC) established two
plants at Daudkel and Hyderabad and subsequently more plants were established in the private
The industry was nationalized in 1972 and the State Cement Corporation of Pakistan (SCCP)
was established following the Economic Reforms Order, 1972. As a result of nationalization, a
total of 10 cement units with an installed capacity of 2.8 million tons per annum were transferred
to the SCCP. Effective price control was also vested with the SCCP and for a long time the
industry operated under a regime of strict regulation and price control. While the cement industry
was working under state control, the SCCP established five new units with an installed capacity
of 1.8 million tons per annum.
In 1985-86 the cement industry was deregulated and private sector was allowed to establish
cement plants. But bulk of the capacity was controlled by the SCCP which had effective control
in the fixation of prices. Severe shortage of cement and price deregulation prompted the private
sector to establish more plants. Seven units were established in the private sector before
commencement of the process of privatisation in 1991.
During the regime of Nawaz Sharif the industry went through major transformation. The
government embarked upon an ambitious privatisation programme and eight units have been
privatised so far. The SCCP at present controls less than 25% of the total installed capacity in the
country which is shrinking with the establishment of more plants in the private sector and
expansion in the privatised units. The units working under the SCCP control are old and
inefficient using 'wet process' whereas the units established in the private sector are new,
efficient and use 'dry process'.
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Cement manufacturing is a high capital- and energy-intensive industry. The capital cost of a
2000 tonnes per day (TPD) plant ranges between Rs. 3.5 billion to Rs. 4 billion whereas the
capital cost of a 3000 TPD plant is estimated at more than Rs. 5.5 billion. Energy consumption
by cement manufacturing units based on 'wet process' is higher than 'dry process'. The 'dry
process' is estimated to be economical by 40% to 50% compared to 'wet process'.
By now it has exceeded 10 million tonnes per annum as a result of establishment of new
manufacturing facilities and expansion by the existing units. Privatization and effective price
decontrol in 1991-92 heralded a new era in which the industry has reached a level where surplus
production after meeting local demand is expected in 1997.
The cement industry crossed the heavily burdened debt mark of Rs 120 billion from financial
The debt, which was Rs 34 billion in 2003-04, has crossed Rs 120 billion this year. Cement
demand in the country is directly proportionate to the growth in GDP. Over the last 3-5 years, the
security situation in the country has resulted in low GDP growth. Despite this, the cement
industry contributed revenue amounting to approximately Rs15 billion in 2004, Rs17.5 billion in
2005, Rs 22b in 2006, Rs 26.3 billion in 2007 and Rs30 billion in 2008 to the national exchequer.
There are 23 cement companies in the country out of which 4 are foreign companies and 3 are
controlled by the armed forces under the aegis of Fauji Foundation and Army Welfare Trust. 19
of these companies are listed on the stock exchanges of the country and their working is
regulated by strong professional and statutory bodies such as Securities and Exchange
Commission of Pakistan, Stock Exchanges of Pakistan, Institute of Chartered Accountants of
Pakistan and Institute of Cost and Management Accountants of Pakistan.
Industry circle further added the companies file monthly, as well as, annual returns of income
tax, sales tax and federal excise. Cement industry is also following the rules and regulation
implemented by FBR. Federal Board of Revenue has the power to check the books of accounts
of any company and the cement sector remains under close scrutiny of the Federal Board of
UNIVERSITY OF CENTRAL PUNJAB 6
The cement industry in Pakistan faces two serious threats: closure of units based on wet process,
and poor cash flow rendering the units incapable of debt servicing due to increasing cost of
electricity, furnace oil and imported craft paper used for cement packing. The cost of furnace oil
alone has increased by nearly 100% in the last 15 months alone. With the increase in furnace oil
the increase in electricity tariff has also become inevitable.
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Pakistan has remained a net importer of cement but due to the privatization of units operating
under state control and subsequent expansion programmes by the new owners supported by
financial has pushed the industry to a point where the country is bound to reach an oversupply
situation. However, the recent increase in energy cost provides opportunity for the efficient units
based on dry process to sustain the situation for a relatively longer period. It would also be
possible because the expansion by the existing units and establishment of new units are being
Pakistan's cement market is divided into two distinct regions, North and South. The northern
region comprises the Punjab, NWFP, Azad Kashmir and upper parts of Balochistan, whereas the
southern region comprises the entire province of Sindh and lower parts of Balochistan.
Traditionally, the southern region has always been surplus in cement production but with the
establishment of more plants in the northern parts of the country the region has become almost
self-sufficient in supply of cement.
The demand-supply gap which for the last decade was in favor of manufacturers is now set to
switch the other way with supply outpacing demand by the end of 1997. Historically, demand
has grown at an average rate of 7%, with the Northern region averaging 8% and Southern region
lagging behind at 4%. There is much pessimism about the industry's future due to a tremendous
increase in supply expected by the end of next year.
The way new plants are being established and existing plants are undertaking expansion, the
demand-supply equation is bound to create surpluses. However, it has been observed that actual
progress is slower than planned to avoid a possible glut situation. This will effectively narrow
down the gap between demand and supply and thereby ease the pressure on prices.
Factors which can possibly change the surplus position into a near-equilibrium between demand
and supply are:-
1. Formation of manufacturers' cartel to avoid price decline;
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2. Delay in implementation of planned additions and expansions;
3. Efforts to export cement; and
4. Increase in demand if construction of some of the mega-sized infrastructure projects
Number of Units (Grey Cement)
North Zone 19South Zone 10
As the cement market is moving from a virtual 'sellers' market' to an over-supply situation, it is
expected that when prices stagnate and profitability becomes a function of volume and
economies of scale, locational advantage and proximity to markets will become extremely
UNIVERSITY OF CENTRAL PUNJAB 9
North Zone South Zone
Number of Units
At present the freight charges are a massive 20% of the retail prices. The plants located very
close to each other and tapping the same market will have to expand their markets which will
increase their freight expenses.
Dandot, Pioneer, Maple Leaf and Garibwal are all located within a radius of 100 kilometers and
are selling bulk of their production in the same areas and will thus face serious competition from
Pakistan has one of the highest population growth rates in the world, touching 3%. This has
prompted a sizable demand for housing facilities in the country. According to estimates of
construction industry, there is a huge backlog of about 6.25 million housing units in the country.
Bulk of the current demand of 0.6 million units needed every year is for urban areas. With
greater urbanization the demand for cement is expected to grow at an average of nearly 7% per
The demand for cement for infrastructure units is expected to grow with the commencement of
work on motorways, power plants, Islamabad New City, Karachi Package and Ghazi Brotha
dam. If all these projects are implemented as per schedule, the demand for cement is expected to
grow at a higher rate.
Government Attitude Towards Sector
Instead of providing any relief in the budget, the sector was further penalized with a 3% increase
in sales tax to 18% and an increase in excise duty to 35%. So far, the manufacturers have been
able to pass on the increase to consumers but the situation is unlikely to continue. However, the
possibility of formation of a cartel cannot be ruled out. Since massive investment has been made
in the sector, any reduction in price of cement can reduce profit margins of all the units.
UNIVERSITY OF CENTRAL PUNJAB 10
Formation of Cartel
Formation of cartel and fixation of price at a level high enough to cover increasing costs of
inputs and ensure reasonable profit margins may provide a short-term relief to the manufacturers.
Such a cartel may be against the interests of consumers but can help the manufacturers to survive
with some dignity.
Formation and smooth operation of a cartel is generally difficult but in the case of cement
industry it may not be so because the only restriction could be on the level of capacity utilization
along with a modest uniform reduction in price of cement. However, the units are in diverse
states of financial health, enjoy different levels of competitive advantage, and therefore need
different prescriptions to maintain their profitability.
In budget 2008-2009 the federal excise
duty on cement has been to Rs 900 per
tones from the existing base of Rs 750
Industry during FY 2009
As there is global economic crisis and
ongoing unfavorable investments
climate, severe crisis of electricity and
deteriorating safety concerns led o
poor economic progress during FY
2009.The GDP growth during FY
2009 hovered around merely 2%,
lowest during the last 7 years in the country. The manufacturing sector showed a negative growth
of 4% compared with sizable positive growth of 5% last year. The growth in GDP was mainly
contributed by outperforming progress made in agriculture sector during the period under the
review which is nearly 4.7%against only 1.7% last year. Government spending of Rs. 550 billion
UNIVERSITY OF CENTRAL PUNJAB 11
on Public Sector Development Plan as announced in last year budget FY 2008 was cut down to a
revised amount of Rs. 418 billion due to liquidity prices prevailing in the country. All these bode
negatively on the cement sector in the country as well. Cement sales in local market during FY
2009 plunged by nearly 14%, first time during the last 7 years.
The cement industry of the country sold over 19 million tons cement on the local market against
about 23 million tons last year. On the other hand, exporters from the cement from the country
are on rise. Total cement exporters from the country first time crossed 10 million marks. Overall
capacity utilization of the available capacity declined to nearly 74% from last year of 93%
mainly on account of less demand and further addition of new capacities during the period under
report. Company has sold equal to 93% of its capacity which is significantly higher than industry
average of 74%. This was only possible due to brand loyalty and customer’s satisfaction on the
UNIVERSITY OF CENTRAL PUNJAB 12
D.G. KHAN CEMENT COMPANY LIMITED
Public Limited Company
Nishat House, 53-A, Lawrence Road,Lahore, Pakistan.Phone: 92-42-6367812-20Fax: 92-42-6367414E-mail: [email protected]: www.dgcement.com
Mrs. Naz Mansha
Mr. Mian Raza Mansha
Khalid Qadeer Qureshi Mohammad Azam Zaka ud din Inayat Ullah Niazi (CFO) Nabiha Shahnawaz Cheema
Mr. Khalid Mahmood Chohan
UNIVERSITY OF CENTRAL PUNJAB 13
M/s A.F. Ferguson & Co.
Mr. Shahid Hameed, Bar-at-Law
Royal Bank of Scotland Allied Bank Ltd Muslim Commercial Bank Ltd Askari Bank Ltd Bank Alfalah Ltd Citi Bank N.A Habib Bank Ltd National Bank of Pakistan Ltd Sandard Chartered Bank Ltd The Bank of Punjab United Bank Ltd
Lahore Regional Sales Office Multan Regional Sales Office DG Khan Regional Sales Office Karachi Regional Sales Office
(Annual report 2009”DG Khan Cement Company Ltd”, p.2)
UNIVERSITY OF CENTRAL PUNJAB 14
DG Khan Cement Company Limited (DGKC) is a producer and seller of ordinary Portland and
Sulphate-resistant cement. The company is a unit of Nishat group which is a leading and
diversified business group with a strong presence in the three most important sectors of Pakistan:
textiles, cement and financial services. The group also has considerable stake in insurance, power
generation, paper products and aviation sectors. DGKCC is listed on the stock exchanges of
Karachi, Lahore and Islamabad.
D.G. Khan Cement Company Limited
(DGKCC), a unit of Nishat group, is the
largest cement-manufacturing unit in
Pakistan with a production capacity more
than 5,500 tons clinker per day. It has a
countrywide distribution network and its
products are preferred on projects of
national repute both locally and
internationally due to the unparallel and
consistent quality. It is listed on all the Stock Exchanges of Pakistan.
D.G.Khan Cement Company has the largest cement manufacturing capacity in the country.
Listed in 1992, D.G.Khan Cement was established by the State Cement Corporation of Pakistan
(SSCP) at Dera Ghazi Khan in 1986. It was privatized to the Nishat group in 1994-95 at Rs35.90
In 1995, D.G Khan Cement (DGK) was at the top of the 19 listed cement units in terms of profits
earned and total assets and ranked second in respect of sales. The company then enjoyed
excellent liquidity with no short-term borrowings; minimal long-term liabilities and a mountain
of cash as high as Rs2.1 billion at end-December, 1995.
By the middle of last decade, the days of sunshine and glory were all but over for the cement
sector. Excess capacity; the teething competition; economic recession and the spiraling cost of
UNIVERSITY OF CENTRAL PUNJAB 15
production all pushed cement producing units in the quagmire of losses. The company is still
market leader with respect to market share of 11.2% to 11.4%.
Nishat Group is one of the leading and most diversified business groups in South East Asia. With
assets over PRs.300 billion, it ranks amongst the top five business houses of Pakistan. The group
has strong presence in three most important business sectors of the region namely Textiles,
Cement and Financial Services. In addition, the Group has also interest in Insurance, Power
Generation, Paper products and Aviation. It also has the distinction of being one of the largest
players in each sector. The Group is considered at par with multinationals operating locally in
terms of its quality of products & services and management skills.
Mian Mohammad Mansha, the chairman of Nishat Group continues the spirit of
entrepreneurship and has led the Group successfully to make it the premier business group of the
region. The group has become a multidimensional corporation and has played an important role
in the industrial development of the country. In recognition of his unparallel contribution, the
Government of Pakistan has also conferred him with “Sitara-e-Imtiaz”, one of the most
prestigious civil awards of the country.
Acquisition of DGKCC by Nishat Group
Nishat Group acquired DGKCC in 1992 under the privatization initiative of the government.
Starting from the privatization, the focus of the management has been on increasing capacity as
well as utilization level of the plant. The company undertook the optimization by raising the
capacity immediately after the privatization by 200tpd to 2200tpd in 1993.
UNIVERSITY OF CENTRAL PUNJAB 16
Now a day the export demand of D.G cement is 2000 TPD. Presently D.G.K.C.C export cement
to AFGHANISTAN, IRAQ AND UAE.
Two different products are produced at DGKCC namely Ordinary Portland Cement and Sulphate
Resistant Cement. These products are marketed through two different brands:
DG brand & Elephant brand Ordinary Portland Cement (It is also
called the OPC and its demand is about 92% because of commonly used).
DG brand Sulphate Resistant Cement (It is also called the SRC and its demand is
about only 8% because it is only used in standing the foundations its main
work is to finish the pours produced while standing the foundations and
made the foundations much strong).
UNIVERSITY OF CENTRAL PUNJAB 17
2.2 million tons/year
In addition to following two brands they are also offering four different packaging which are as
DG PLASTIC BAG
Measures Taken in Protecting the Environment and Its Impact on Company’s
DGKCC is part of the solution and it has the track record to prove it. A leader in the fight against
pollution, DGKCC has been a pioneer in developing innovative methods for recycling. Its
patented cement-making process -- CemStar -- significantly reduces carbon dioxide (CO2) and
nitrogen oxide (NOx) emissions in the cement-making kiln process. Today, cement producers
throughout the PAKISTAN use that process, resulting in a cleaner environment nationally.
The Company constantly seeks new ways to utilize innovative technologies in its environmental
protection programs. The commitment made by D.G.K.C.C to the environment is paramount, the
Company’s kilns use the most advanced air pollution control systems ever utilized by a cement
plant in PAKISTAN.
To meet the increasing demand and to capitalize on its geographic location, the management
further expanded the capacity by adding another production line with a capacity of 3,300 tons per
day in year 1998. Design of the new plant is based on latest dry process technology, energy
efficient and environmental protection from particulate pollution according to the international
standards. The plant and machinery was supplied by M/s F.L. Smiths of Denmark. As a result,
DGKCC emerged as the largest cement production plant in Pakistan with annual production
capacity of 1,650,000 M tons of clinker (1,732,000 M.Tons Cement) constituting about 10%
UNIVERSITY OF CENTRAL PUNJAB 18
share of the total cement production capacity of the country. The optimization plan is still
underway to increase the total capacity of the two units to 6700 TPD by mid of 2005 from 5500
TPD at present.
Expansion -Khairpur Project
Furthermore, the Group set up a new cement
production line of 6,700 TPD clinker near Kalar
Kahar, Distt. Chakwal, the single largest
production line in the country. First of its kind
in cement industry of Pakistan, the new plant
have two strings of pre-heater towers, the
advantage of twin strings lies in the operational
flexibility whereby production may be adjusted
according to market conditions. The project is
equipped with two vertical cement grinding
mills. The cement grinding mills are first
vertical Mills in Pakistan. The new plant would
not only increase the capacity but would also provide proximity to the untapped market of
Northern Punjab and NWFP besides making it more convenient to export to Afghanistan from
For continuous and smooth operations of the plant uninterrupted power supply is very crucial.
The company has its own power generation plant along with WAPDA supply. The installed
generation capacity is 23.84 MW.
Sales and Production
In FY'09 DG Khan Cement hit a major land mark regarding growing sales, despite the severe
power crises and security situation of the state. Moreover, due to global recession and the
liquidity & credit crunch, the buying power of the major customers both at home and abroad was
UNIVERSITY OF CENTRAL PUNJAB 19
looking bleak. Local sales decreased by 14%, while the exports passed the 10 million ton mark.
Also the company had to recover from a negative profit after tax due to a huge amount of debt
leverage in the balance sheet.
Despite all these factors the company due to sharp and effective steps recorded a huge boost in
sales of 45%, a figure which even overshadowed the 17.86% rise in the operating cost thus
registering a profit after taxes of Rs 525m. The exports also doubled playing a major part in the
increasing sales. The company's production of both cement and clinker was less than the
previous year. The cement production was 8.3% less than the year 2008-09 due to lack of
resources like power and also due to the weakening buying powers of the customers because of
inflation. The production of clinker followed similar trend being 4% less than FY'08 in FY'09.
DG Khan Cement Co. Ltd., production
processes are environment friendly and
comply with the World Bank’s
environmental standards. It has been
certified for “Environment Management
System” ISO 14001 by Quality Assurance
Services, Australia. The company was also
certified for ISO-9002 (Quality Management
System) in 1998. By achieving this
landmark, DG Khan Cement became the
first and only cement factory in Pakistan
certified for both ISO 9002 & ISO 14001...
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ON GOING PROJECTS:
Work on Waste Heat Recovery project is underway. Civil work and fabrication is at full swing.
Shipments of plant & machinery have already started reaching at plant site. The project is
expected to complete as per schedule.
Cement manufacturing is highly energy extensive. Therefore, focusing on non conventional fuels
as alternative or substitute fuels to conserve energy is simply mandatory requirement of the day.
Your management has decided to use Municipal Solid Waste as Refused Drive Fuel (RDF) as an
alternative to Coal. This will not only reduce the rising cost of production but also provide an
opportunity to dispose of permanently the waste material in a controlled environment friendly
sustainable fashion. In this regard your management has singed an agreement with a German
company for the supply of modular design machinery and equipment for RDF project.
Current situation posed serious doubts for stable and sustained developmental and infrastructural
projects in the country. Safe and secure environment is of pivotal importance for new
investments. Entrepreneurs both local and foreigners pay high importance to conducive and safe
working place. Ongoing war like situation in Northern parts of our country and severe security
concerns in other areas of the country is hampering the overall economic activities. In addition
liquidity crisis, increasing electricity tariff, power shedding and still higher cost of financing are
serious impediments to economic growth in the country. Going forward, spending by Govt.
under annual PSDP is reportedly much less than
budgeted for the first quarter of FY 2010. All these
factors will affect the cement demand in the periods to
In export markets, specially, in Gulf region the
competition is getting stiff after capacity additions by a
few Gulf States. Recently Saudi Arabia has also
allowed cement exports which is a setback for Pakistani
cement manufacturers. Nevertheless, cement exports
from the country are expected to achieve a decent
growth in the current financial year as well.
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To provide quality products to customers and explore new
markets to promote/expand sales of the Company through
good governance and foster a sound and dynamic team,
so as to achieve optimum prices of products of the Company
for sustainable and equitable growth and prosperity of the
To transform the Company into a modern and dynamic
cement manufacturing company with qualified professionals
and fully equipped to play a meaningful role on sustainable
basis in the economy of Pakistan.
UNIVERSITY OF CENTRAL PUNJAB 23
• Cement acts as a binding agent, holding particles of aggregate together form concrete.
• Cement production is highly energy-intensive process and involves the chemical
combination of calcium carbonate (limestone), silica, alumina and small amounts
of other materials.
• Burning limestone to make clinker produces cement, and the clinker is blended
with additives and then finely ground to produce different cement types.
There are following five steps given as under:
The raw materials needed to produce cement are:
1) Shale 2) Limestone
3) Bauxite 4) Gypsum
5) Iron ore
UNIVERSITY OF CENTRAL PUNJAB 24
Step 1: Extraction of raw materials.
The raw materials are extracted from the quarry by digging the holes through machines in
mountains containing limestone and other resources needed to be used in process then they do
Step 2: Storage and blending of raw materials.
Then all these raw materials are to be stored for the further process. Those raw materials are then
crushed and then blend with each other.
Then these are transported to the plant where they are stored forming piles through machines and
Step 3: Raw grinding and burning
After that there will be grinding in a careful mixture which produces a
very fine powder in a 2000 horse power roller mill, so this fine powder
is known as ‘Raw Meal’.
Next, the fine powder is heated as it passes through the Pre-Heater
Tower into a large kiln, which is over half the length of a football field
and 4.2 meters in diameter. In the kiln, the powder is heated to 1500
degrees Celsius. And being suddenly and dramatically cooled by
bursts of air. Now this creates a new product, called Clinker. And is
just like small black soft stones. It is the basic requirement for the
production of all cements.
Step 4: Cement grinding and storage.
A small amount of gypsum (3-5%) is added to the clinker to regulate how the cement will set.
The mixture is then very finely ground in a finishing mill. The mill is a large revolving cylinder
containing 250 tons of steel balls that is driven by 4000 horse power motor. Then "pure cement"
UNIVERSITY OF CENTRAL PUNJAB 25
is obtained and is so fine that it can pass through a sieve that will hold
water. During this phase, different mineral materials, called "cement
additives", may be added alongside the gypsum. Used in varying
proportions, these additives, gives the cement specific properties such as
reduced permeability, greater resistance to sulfates and aggressive
environments, improved workability, or higher-quality finishes.
Finally, the cement is stored in silos before being packing and delivers to the sites.
Step 5: Packing and delivering.
After being stored in silos there is a last phase of packing that cement and loading and delivering
that very fine cement to the sites where it requires.
The cement manufacturing process consists of many simultaneous and continuous operations
using some of the largest moving machinery in manufacturing. Over 5000 sensors and 50
computers allow the entire operation to be controlled by a couple of operators from a central
Each tone of cement requires about 1.7 tone of limestone, gypsum and silica, etc. By volume
limestone accounts for about 80% and clay 19% of the intermediate product — clinker. Gypsum
is later on added to clinker in the ratio of 4:96 to obtain cement.
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Flow Process of Production
Steps of Production
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Cost of production
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Driller Holes Raw
Silo 1 Pre-Heater
Since the industry faces a situation where sales price will be fixed by mutual consensus, the cost
of production will be the most critical factor of profitability. Energy cost is a major component
of total cost of production. It contributes at an average 40 to 45 percent towards total cost of
cement production. Energy cost is even higher in case of those plant which use wet process. A
cement plant based on wet process consumes 165 kg of furnace oil to produce one tone of clinker
as compared to 85 kg of furnace oil used in dry process to produce the same quantity of clinker.
Since cement plants use both furnace oil and electricity, any increase in the prices of these two
products is detrimental to profitability of the industry. Ever since October 1995, however, there
has been more than 60% increase in the price of furnace oil.
Another significant cost component is packaging material. Cement is rarely sold in bulk in
Pakistan — almost all cement sales are in four-ply paper sacks. Cost of paper sacks has gone up
by almost 90% since December 1994.
D.G. Khan Cement was the most prized unit out of the cement units privatized by the Nawaz
Sharif government. Of all it was the most modern plant with bulk of depreciation amortized and
interest charges paid for. The company enjoys a virtual monopoly in its sales territory. There is
no other cement plant within a radius of 400 kilometers in Suleiman Range.
The expansion will come on line at a time when there will be supply overhang in the industry.
With margins coming under pressure it will have to bear the added brunt of higher financial
charges and increased depreciation cost in the years to come.
Analysis of the latest half-yearly results of the company shows that although sales of the
company have gone up by 3.5%, the increase in cost of sales has reduced gross margin from 61%
to 48%. With rising inputs cost not being matched by similar increase in price of cement,
margins are expected to shrink further. The company, after the expansion is expected to face
fiercer competition from Zeal Pak, Pioneer, Dandot and Wah. To wrest market share from the
competitors, it is likely that D.G. Khan will have to reduce its cement prices.
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The decision making style of D.G.K.C.C is DECENTRALIZATION. And the organizational
structure is FLAT. Although all the employees have opportunity to give the decisions regarding
the plant performance and for that also meetings are held every day between DIRECTOR and
MANAGERS of the company in which they also discuss and made future plans of the daily
routine work and they also check out their previous day work efficiency and performance, every
manager is responsible to give the performance repot of every employee working under him.
Also an annual meeting which is always announced by the chairperson is held between the chair
person and directors of the Company in this meeting plan and goals to be achieve in the coming
year are set and also they see and compare the Company’s performance between the previous
and next year and here the head give the certain target to be achieve in the coming year although
the suggests are taken by the directors but these suggests are not give so much importance
regarding production. And also there is a process of delegation within the company.
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Top Management of DGKCC
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GM(HR & ADMIN)
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Quarring of MaterialCrushing of Material Grinding of MaterialBurning of ClinkerGrinding of CementCement Dispatch
Preparation of financial reportsData EntryMaintaining RecordPreparation of Letter of CreditPurchase request Order RequestAnalysing Financial Statements
FinanceInstallation and Maintainance of electrical equipmentDesigning of electrical equipmentsRepair of equipmentsInspection and utilization of manpower and materials Cost and budget controls
Analyze data, designs and performance of new or existing civil works Efficient maintenance, inspection and repair of all civil structuresHandling on-the-job accidents And injuriesArranging training programmes for employees of company for job efficiency and safety.
Leading and managing all aspects of the sales Monitoring & reporting on sales metricsKeeping record of contracts and agreementsMonitoring of monthly sales and booking the targets Handling customer requests, requirements, complaints and related issues
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Managing the disaster situation when ever there is any accident of any equipment.Designing and making of equipmentsEnsures safety and reliabilityProcurement of Machineries and PlantsDeveloping the infrastructures and monitoring of progress.
M ech a n ica l
Loading & storage of major deliveries Inspection of deliveriesIssuance of products on requestMaintainance of equipmentsRecord of equipmentsObtains and evaluates quotations and bids from various suppliers
S to re
Selection and recruitment of employeeMaintaining personnel inventoryTraining of employeesEnsures safetyRegulate opnion surveysFormulation and co-ordination of policies
A d m in . & H R
Blasting Collection of raw material Transportation of collecting raw material to storage yards
Q u a rry
Data entryMaintaining the electronic recordData storageMaintaining internal communicationDeveloping user friendly softwares
SWOT stands for strengths, weaknesses, opportunities and threats. A SWOT analysis is a
technique that many companies use during strategic planning; basically an organized way to
evaluate where to focus time, money and energy to improve productivity and growth. A SWOT
analysis can be a valuable tool for setting milestones or approaching a venture investor, because
it demonstrates a solid understanding of your company performance and the factors influencing
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Avaliability of Raw Material
Self Power Generation
Own Paper Bag Plant
Location of Project
Increase in Dem and of Cem ent due to upcom ing Sports Events
Export Dem and
Introduction to New Product LineRehabiliation and new Construction Projects in the Country
Low Prom otional Cam paignsNo Perform ance AppraisalSeniority IssuesCentralised Decision M aking
Increase in Fuel Prices
Increase in Intrest RatesDecrease Profitability Due to Competition
High Level Taxation
Explanation of SWOT Analysis
Availability of raw material
The easy availability of the key raw material Gypsum, Shale and limestone all over Pakistan
gives a smoother start as which I think is a very good for any cement industry. And the plants are
installed quite near to raw material which is a competitive edge.
As we all know the labor of Pakistan is very cheap. So this is a healthy sign for the company as
the company has to pay less to their labor which result in saving of their income and later on can
be utilized in the expansion of cement plant. Resultant increases the cement production.
The plant of the company is equipped with the latest machinery having a latest technology in
Pakistan as compared with others. Although it is expensive but it saves the cost by producing
quality cement and creating value in mind of customers.
As the plant equipped with the modern technology so it has a capability to produce better quality
using less energy than others. The company has been certified for “Environment Management
System” ISO 14001 by Quality Assurance Services, Australia. The company was also certified
for ISO-9002 (Quality Management System) in 1998. By achieving this landmark, DG Khan
Cement became the first and only cement factory in Pakistan certified for both ISO 9002 & ISO
Self Power Generation
The company has its own power generation plants in the factory area so to meet the plant
requirements and we all know that Pakistan these days suffer with serious energy crisis so the
company do not totally depends upon WAPDA even from its own generation the company
produces energy with much less cost so I think it is another main strength that DGKCC have if
compared with other cement industry because not other cement plants in Pakistan have such
energy generation system so they have to depend upon WAPDA.
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Yes, DGKCC has a very good image in mind of its customer’s reason being they produce the
finest quality since day first of its production and take steps to make it better and even charge
less compared with its competitors. The company has its positioning through its slogan, which
Company launches its new plant near chakwal, which double its production capacity. So this new
plant helps in gaining the competitive edge over others in north region.
At present and from few years organization is earning profit which is its strength because in
profitable organizations more and people invest more and more. So profitability is a good sign
for the organization. Here are some figures to prove further:
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Use of Coal and Waste Products
Coal is found in all the four provinces of Pakistan. The country has huge coal resources, about
185 billion tonnes, out of which 3.3 billion tonnes are in proven/measured category and about 11
billion are indicated reserves, the bulk of it is found in Sindh.
At present, DGKCC switch to coal and gas as basic fuel. According to data the cost of cement
production per tonne by furnace oil was around Rs2, 083 whereas the cost of production per
tonne by coal was Rs8,68,saving Rs1,215 per tonne. Similarly, the saving per bag was Rs60.75,
which is a huge difference. Now ‘husk’ is also introduce as basic fuel in order to minimize
production cost as much as possible.
Own Paper Bag Plant
DGKCC has now installed its own paper bag plant and became pioneer in that to even minimize
its bag cost even that plant also sells bags to other cement plants as per demand.
Low Promotional Campaign
If we analyze this they are not paying much attention to promotional campaign. They are not
advertising their product as per requirement because through promotional campaign they can
also gain more market. They are only using trade promotions, which are not enough to have a
good positioning in the market.
No Performance Appraisal
There is no proper performance appraisal program. If one works hard and want to show
creativity his performance is not appraised by any instrument. The managerial staff is not
promoted on the basis of performance, as they have no any tool to measure performance of
managers. They only one way to measure the performance which is annual confidential report,
which is prepared by only one person who is immediate boss of any employee.
In management there is a seniority virus means there is no proper mechanism for the promotion
of the seniors. Experienced persons have a lot of experience and they know the organization best
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and how to effectively run that organization. They know that what to promote and what not to
promote about the organization. This irregularity in promotion of managerial staff creates job
dissatisfaction and lowers down their productivity. It may happen that staff is not dissatisfied
with the job but at the same time they may not be satisfied with their job.
Centralized Decision Making
Although the decision making style of DGKCC is decentralized that what the company says but
the ground reality is that in decision making process the middle level management is not much
consider by the upper management which creates sense of irresponsibility among the members of
company. So ultimately it creates job dissatisfaction. Their decisions are not praised and honored
much as they expect.
Location of Project
Location always matters, if we see in southern Punjab there is not enough cement factories other
than DG Cement. So we can say that there is somewhat monopolist in that part and it controls the
whole market. If the company upgrades its production capacity they have a good chance to cover
the foreign market of Afghanistan from that plant.
Increase in demand of cement due to the upcoming sports event
South Africa is schedule to host the football world cup of 2010 due to which they need to make
the football stadiums for the World Cup and Sri Lanka are also expected to approach Pakistani
companies for cement imports because Sri Lanka to co-host the cricket world cup of 2011. So
this is a good chance for a company to maximize profit.
As there is a war like situation in Afghanistan and Iraq so there is a huge demand of cement in
rehabilitation process, most of Indian cement plants are in north region so from there it costs a lot
to reach in southern region so this also again is a huge market to be capture, also there is a huge
demand in UAE and Russia. Result there is a huge cake of international market which a
company have a chance to cater.
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Introduction to New Product Line
The company still produces OPC and SRC but there is also a room for producing the ‘White
Cement’ so I think by introducing the new product line they can also increase their sales and
Rehabilitation and New Construction Projects in Country
As we all know there’s started a rehabilitation phase in north areas of Pakistan after war against
militants and in South Waziristan there is a rehabilitation phase to be coming and a lots of
projects have started in the country. So this increase in demand creates a new opportunity for the
company to earn more profit.
Increase in Fuel Prices
Increase in the international prices of coal and oil is a major threat. As Pakistan coal contains
high percentage of sulphur due to which the company is not able to use the local coal as a source
of energy. So the company has to import the coal from different countries like South Africa,
china and Indonesia at high prices. This will restrict the profit margin.
There is a global recession going these days so this is also a threat to cement industry as it affects
a lot to export market.
That instability always remains threat to Pakistan and its cement industry also because due to this
there’s not as much growth and now the war like situation in a country is really a big issue.
IMF Package in Future can cause to decrease GDP and economical development in Pakistan.
This will also be cause to stop development of infrastructure. So it will have huge effect on
company also in fact on whole industry.
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Increase in Interest Rates
Unanticipated increase in interest rates or less than expected demand growth might create severe
crises for the sector couple of years forward.
Decrease profitability due to competition
The sharp decline in cement prices has been witnessed due to domestic competition among
companies has dampened the profitability of the company. This increase in competition among
the players have further decreased the prices of cement in the local market. So the company
decrease the prices of products in order to get high market as compared to its competitor.
High level of taxation
Presently, the company is heavily burdened due to levy of Federal Excise Duty @ Rs. 750 per
ton and General Sales Tax @ 15% on duty paid value. In addition to Federal Excise Duty and
General Sales Tax, company is also paying the provincial levies (Royalty and Excise Duty) on
acquiring of raw material for production of cement i.e. lime stone, shale and clay. Per ton cost impact of these taxes in four provinces of Pakistan is as follows:
Punjab NWFP Sindh Baluchistan
Lime Stone 24 21 17 65
Shall/Clay 3 4 3 11
A comparison of taxation and retail prices with other regional countries revealed that taxation in
Pakistan is highest while cement retail prices are lowest.
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Tour to DGKCC
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As there are not many lope holes in the company because they strictly follow the standards.
But still there are some tribulations that need to be viewed.
They should have to pay their serious attention to their marketing in order to boost their sales
and income of the company as the company also suffers very serious problems regarding sale
of cement these days. Reason being due to:
Economic recession all over the globe the company is in crisis these days.
Instability of politics in Pakistan.
Terrorism in Pakistan.
Energy crisis in Pakistan.
There is a lot of problem regarding sitting arrangement of guests in the head office as even i
internee had issue throughout my internship and this is just because they have a very
conjusted place so they need to work on that.
Though they have a very good record system but the file keeping is not so much good all the
record files are placed randomly at the corner of finance department n whenever a file is
needed then there would be a lot of problem in order to search that particular file.
As NISHAT head office is not just only the head office of DG Cement but also the head
office of Nishat Power, so now they are really running out of space from everywhere they
had a major space issue regarding car parking, file keeping record, office space.
There are many few people who are computer literate most of the employees doesn’t operate
the computer well though they use the computer but they don’t have a good command on
computer. So they need to be trained more regarding the use of OACLE software.
Working after hours without any incentive.
Multitasking continuously effects work.
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They should pay much attention to their employee’s promotion. They should use
performance appraisal system.
Top management should use up-to-date marketing practices rather to use orthodox ideas.
This is the age of advertisement and they should advertise their product rather use push
strategy. They should emphasize on pull strategy as well. They have good, energetic,
experienced marketing and sales team they should use it constructively.
They should pay much attention to promotional tools. They should advertise their product.
They are only using trade promotions, which are not enough to have a good positioning in
the market. They should use other promotional tools as well
The middle level management should be involved in decision-making. In this way they will
feel sense of responsibility and their productivity will increase. Their loyalty with the
organization will also increase.
They should also introduce some employee recognition program. In this way the employees
will be more satisfied with their jobs and ultimately will be beneficial for the organization in
terms of high productivity.
Skills and performance based performance appraisal program should be applied.
Employees should be promoted on the basis of their achievement.
Employees should be rotated in different jobs and tasks, as monotony decreases productivity.
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Working at DG Cement has provided me with an invaluable experience of how the Financial
matters are run and solved. I had chosen to go into this field because of the interest I have in
From the whole analysis, company has growing potential. As Pakistani market is going to be
liberalized, new players are entering all sectors including cement sector, competition is going
to be very intensive and severe.
To remain market leader DGKCC should reorganize its policies regarding pricing,
placement, workforce management and development. To gain and sustain competitive
advantage DGKCC should change itself continuously according to local as well as
international market. DG Khan Cement factory is the leading company in the cement sector.
The company is performing very well for the financial point of view. It pays a huge amount
annually in the form of taxes to the government of Pakistan. Company’s distribution channels
are very effective.
The prices of D G Cement products are higher than the competitors due to the fine quality, it
provides. It can also be concluded that D G Cement should reduce the prices of its products.
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.www.cementforum.com .http://www.cement.org/basics/images/flashtour.html .http://www.inlandcanada.com/NR/exeres/3E7E96B8-1DF4-4F8D-A5CA-
0FC35A4BDBD5.htm.http://www.cement.org/basics/howmade.asp .http://www.cement.org/basics/images/flashtour.html .http://www.brecorder.com/index.php?
2009/Cement-industry-crosses-Rs120-billion-debt-mark.http://www.pakistaneconomist.com/database2/cover/c96-97.asp . http://www.cement.com.pk/cement/pakistan-cement-industry.html . http://www.cementchina.net/news/shownews.asp?id=4144 . http://www.dgcement.com/financial-reports/AnnualReport2007-08.pdf . http://www.dgcement.com/financial-reports/DG1stQurater2008-09.pdf . http://economicpakistan.wordpress.com/2009/02/01/cement-industry/ . Analysis of Financial Statement by Gibson . http://02e4f8d.netsolhost.com/financial-reports/AnnualReport2006-2007.pdf
1. Economic Survey Of Pakistan 2006-07
2. Economic Survey Of Pakistan 2007-08
3. Annual Report Of Lucky Cement 2007-08
4. Annual Report Of Fauji Cement 2007-08
5. Annual Report Of D.G Khan Cement 2007-08
6. Annual Report Of D.G Khan Cement 2008-09
7. Annual Report Of Pioneer Cement 2007-08
8. Budget Review 2008-09
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II. MUKHTAR AHMAD
III. ELAHI BUKHSH
INTERNSHIP OFFER LETTER.
INTERNSHIP COMPLETION LETTER.
EMPLOYER EVALUATION FORM.
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(D.G Khan Cement Company LTD)
Prof. Nisar Ahmad
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