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Table of Contents
TABLE OF CONTENTS 1

CORPORATE PROFILE 2

BESTWAY GROUP 2

BUSINESS SEGMENTS 3
April 18, 2011

BESTWAY CEMENT 4

VISION 4

CORPORATE MISSION 4

PRODUCTS 6

PORTER 5-FORCES MODEL: 7

COMPETITOR ANALYSIS 9

COMPETITIVE PROFILE MATRIX (CPM) 13

PRODUCT LIFE CYCLE 14

BCG MATRIX: 18

PRODUCT MIX: 19

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Corporate Profile
Bestway Group

Bestway Cement Limited is part of the Bestway Group of the United Kingdom. Bestway Group
was founded by Sir Mohammed Anwar Pervez nearly thirty three years ago on what could be
best described as one man’s vision and passion. Since then it has translated into a unique and
successful group of businesses spread across the globe with the help of committed, professional
and hardworking management and staff, together with loyal customers and suppliers. The Group
has a well diversified portfolio incorporating within its folds cement manufacturing, global
banking, wholesale cash & carry business, a string of retail outlets, real estate investment, ethnic
April 18, 2011

food and beverage import and distribution and milling of rice. Recently the group has embarked
upon a large power generation project in Pakistan thus further diversifying its operations and
revenue base. Bestway is U.K’s second largest cash and carry operator in terms of turnover with
group annual turnover in excess of US Dollars 3.6 billion and profits in excess of US Dollars 135
million; the second largest cement producer in Pakistan and joint owner of Pakistan’s third
largest bank, United Bank Limited. Its rice milling facilities are one of the largest of its kind in
the country. The group is the largest overseas Pakistani investor with investments in excess of
US Dollars 1 billion and a global workforce of over 22,000 people spread over four continents.

Bestway Cement

Vision

To Produce High Quality Cement at The Lowest Cost

Corporate Mission

 Bestway will consistently produce High Quality Cement.

 Bestway will endeavor to be the lowest cost producer.
 It is company’s aim to achieve 15% of the market share of North Zone from present 12%
by year 2008 and ultimately to 25% in the longer term. 
 Bestway will continue to provide a high standard of customer service.
 In order to meet future expansion needs, Bestway will continue its policies of staff
training and development, promoting from within whenever possible.

Bestway appreciates it has responsibility towards the community within which it operates.  It
will continue to set aside 2.5% of the net profit for education and charitable purposes.

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Bestway Cement Hattar

In 1994 work was started on the cement plant in the under developed area of Hattar, Haripur in
the North West Frontier Province, Pakistan. This was an initial investment of US$120 million.
The contract for the supply of main plant was signed with Mitsubishi Corporation of Japan in
June 1995. The suppliers sub contracted some of the equipment to other international
manufacturers, namely the crushers to FAM of Germany, Cement mill to Fuller of USA and
electrical and instrumentation to ABB of Switzerland and Siemens of Germany. Civil works
started in January 1996 and the Kiln was fired in April 1998, which is a record in itself.

Capacity Enhancement
April 18, 2011

Bestway’s proactive management has kept the Company one step ahead of its competitors. The
timely and strategic decisions of the management have enabled the Company to maintain its
current market share of around 8% and its position as the lead exporter. Hattar plant’s initial
capacity was 1.0 million tons per annum. In 2002, at a cost of US$20 million, plant capacity was
enhanced to 1.15 million tons per annum to meet the ever increasing demand for quality cement.
Owing to the management’s insight on growing market demand and the potential to export, in
2004 the plant’s capacity was further upgraded to 1.25 million tons of clinker production.

Bestway Cement Chakwal-I

In February 2004 owing to the growth in market demand, Bestway Group took the strategic
decision of expanding its operations through the setting up of a 1.8 million tons per annum
cement plant near Village Tatral of District Chakwal, Punjab Province, Pakistan. This is the
Group’s second Greenfield development project at a cost of US$ 140 million.

Bestway Cement Chakwal-I has led to the direct and indirect creation of jobs for more than
2,000 jobs - injecting a new lease of life in one of the most economically dispossessed parts of
Pakistan.

Mustehkam Cement

To further extend its presence in the cement industry, Bestway decided to bid for 85.29% of
equity of Mustehkam Cement Limited a 0.6 million tons per annum capacity plant, following an
offering by the Privatisation Commission, Government of Pakistan. The company’s bid of
approximately US$70.0 million was accepted in September 2005. Mustehkam’s plant is in close
vicinity of our existing operations in Hattar, District Haripur, NWFP. Though the production of
the enterprise had been discontinued in 1999, due to the hard work and dedication of our local
staff and management, Mustehkam started production in December 2005 – one month after
acquisition.

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Bestway Cement Chakwal-II

In May 2006 the Group announced plans for the establishment of a second 1.8 million tons per
annum capacity plant adjacent to our existing operations in Chakwal at a cost of US$180.0
million. This would be Bestway’s third Greenfield cement plant in Pakistan. This would be an
identical plant to the existing Line-1, having 1.8 million tons capacity.

By the end of the first quarter of 2008, through these investments, the Group’s cement
manufacturing capacity is set to exceed 6.0 million tons per annum, making Bestway the second
largest cement producer in the country.

Porter 5-Forces Model:

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Bargaining Power of Supplier:

The suppliers of the cement industry are unique and have a long-term relationship with them. But
due to the uncertain political and economical condition of the country Bestway is under
continuous threat of increase in prices by the suppliers. Bestway uses furnace oil and natural gas
for manufacturing thus changing prices of oil and gas also affect the manufacturing cost of
cement. Electricity is supplied by WAPDA and due to the load shedding and increased prices on
commercial use of electricity Bestway is under immense pressure of the supplier. So the price is
decided by the supplier. Bestway also has to import coal at price higher than that of local market
because local coal cannot be used efficiently for the manufacturing of cement.

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Bargaining Power of Buyer:

The buyers don’t acquire much of the bargaining power a part from the contracts done with
Government or large public sector organizations. The local consumer has to pay the fixed price
with tolerance range of 1%. , the cement industry is capital intensive, so customers cannot use
the threat to supply their own needs through vertical integration as a device for forcing down
prices. But in future by the dumping of cheap cement by china might give some bargaining
power to the customer.

Threat of New Entrants:

There are no government regulations or restriction to start a cement company but the problem is
April 18, 2011

that it requires a lot of capital; this mere fact diminishes the threat of new entrants. But still firms
from abroad can establish or export their cement at cheaper prices which does not reflect the cost
of the doing business in Pakistan. Thus the dumping of cement on prices far below ours is a
potential threat for the business.
Threat of Substitute of Product:
Coal fly ash, blast furnace slag and other mineral mixtures can be substituted for cement in
concrete mixes for buildings, saving energy, disposing of a waste product, improving the quality
of the concrete, and reducing cost. Cement substitutes should be distinguished from concrete
additives, such as plasticizers and air entrainment agents and from aggregate substitutes, such as
ground glass or ground scrap rubber.

Slag is a by-product of both iron and steel, and ground iron slag from blast furnaces can be used
for making concrete.

Fly ash is one of the byproducts of burning coal to create electric power. It can be utilized for
the same function as cement.

Silica fume was once a cheap waste product; but high demand has made it a high-cost
admixture, used primarily for bridges and other structures where top weathering performance
and high strength are needed. Concrete made from silica fume is expensive, however, not only
because of the material cost, but because the powdery fineness of the fume makes it hard to
handle. It is often turned into slurry before use.

Rice hull ash, as long as quality is controlled, is another material that can be used to replace
cement. So far, its use remains at the laboratory stage.

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Competitor Analysis
Key Players

Until recently there were 24 cement manufacturing units in the country which were reduced to
23 with the closure of National Cement's Karachi unit. Out of these, 2 units produce white
cement, one slag cement and the remaining produce ordinary Portland cement (OPC). Some of
the important competitors of Bestway cement and their brief overview is as follow.

Cherat Cement located in NWFP has an installed capacity of 0.72 million tonnes per annum.
April 18, 2011

Cherat was the first cement plant in the private sector to commence commercial operations
(1985) after the end of state monopoly. Its main markets are NWFP and upper Punjab. The
company is owned by Ghulam Faruque group which also owns Cherat Paper sacks. The
company has recently doubled its capacity and expansion has come at an appropriate time. It is
in a position of taking advantage of the 'cement hungry northern region' for capacity utilization.
Expansion also provides potential of achieving economies of scale

D.G. Khan Cement was the most prized unit out of the cement units privatized by the
Nawaz Sharif government. Of all the plants owned by the SCCP 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.
The current capacity of 720,000 tons per annum (TPA) is being enhanced to 1.809 million tons at
a cost of Rs. 6 billion.

Dandot Cement: Privatized in 1992, was able to wipe off its accumulated losses by the end
of its first financial year after privatization. Dandot has increased the plant capacity from 1000
tons to 1600 tons per day, through an optimization program completed in July1995.

The Chakwal Group, which acquired management control of Dandot Cement, is setting up
another cement plant, Chakwal Cement the largest cement plant in the country. This will give the
Group control over 2.3 tonnes per annum production. Chakwal Cement is located close by a
motorway to be constructed which provides it an opportunity to market its cement in large
quantities to the project.

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Lucky Cement came into existence in 1996 with a daily production capacity of 4200 Tons
par day, currently is an omnipotent cement plant of Pakistan, and rated amongst the few best
Plants in Asia.Sponsored by well known “Yunus Brothers Group – one of the largest export
houses of Pakistan”, Lucky Cement Limited is presently a 21,000 Tons Per Day, dry process
Cement Plant With production facilities in Pezu (Production capacity: 13,000 Tons per day) as
well as in Karachi (Production capacity: 8000 Tons per day) it has the tendency to become the
hub of cement production in Asia.

Fauji Cement Company, headquartered in Islamabad, operates a cement plant at Jhang

April 18, 2011

Bahtar, Tehsil Fateh Jang, and 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
10 years. Sponsored by Fauji Foundation the Company was incorporated in Rawalpindi in 1992.
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.

Maple Leaf at the time of privatization in 1992, the capacity of to produce Ordinary Portland
Cement (OPC) was 1000 tonnes per day (tpd). A second plant of 4000 tpd was commissioned in
1998 and a third plant of 6700 tpd was online in 2006. This increased the total capacity to 11,700
tpd. The capacity of White Cement has also increased from 100 tpd to 500tpd with the addition
of a new plant. This plant also has provisions for doubling the capacity to 1000tpd. Presently
Maple Leaf cement has 9% of the market share of OPC and is a leading brand in Pakistan with a
diverse customer base. It is also the largest producer of White Cement in the country.

Major competitors of Bestway Cement constitute of:

1. Luckey Cement Ltd.
2. DG Khan Cement ltd.
3. Pioneer Cement Ltd.
4. Pakistan Cement.
5. Mapleleaf Cement ltd.
6. Attock Cement Ltd.
7. Fauji Cement ltd.

Actual dispatches from July 2009 ~ June 2010 (in tons)

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S/N Company Local Export Total

o
1 Lucky Cement 3,183,063 1,456,900 4,639,963
2 D.G Khan Cement Ltd. 2,214,004 153,433 2,367,437
3 Pioneer Cement Ltd. 1,136,956 131,985 1,268,941
4 Pakistan Cement 1,283,568 75,856 1,359,424
5 Bestway CHK Cement 1,032,048 54,762 1,086,810
6 Mapleleaf Cement Ltd. 1,347,576 45,239 1,392,815
7 Attock Cement Ltd. 1,187,571 117,191 1,304,762
8 A.C Nzp. Cement Ltd. 1,069,272 101,270 1,170,542
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9 Bestway Cement Ltd. 913,898 249,239 1,163,137

10 Fauji Cement Ltd. 990,829 152,208 1,143,037

TOTAL DESPATCHES BY TOP 10 COMPANIES

DURING FINANCIAL YEAR 2006-2007

5000000 All Values in Tons

4639963
4500000
4000000
3500000
3000000
2367437
2500000
2000000
1268941 1359424 1392815 1304762
1500000 1170542 1163137 1143037
1086810
1000000
500000
0
Lucky D.G Khan Pioneer Pakistan Bestway Mapleleaf Attock A.C Nzp. Bestway Fauji
Cement Cement Cement Cement CHK Cement Cement Cement Cement Cement
Pezu+Khi Ltd. Ltd. Cement Ltd. Ltd. Ltd. Ltd. Ltd.
Ltd.

Competitive Profile Matrix (CPM)

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Lucky D.G Khan Bestway Cement

Cement Cement

Critical Weigh Rating Score Rating Score Rating Score

Success t
Factor
Advertising 3 0.60 4 0.80 2
0.20 0.40
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Product 0.10 3 0.30 4

Quality 4 0.40 0.40

Price 4 0.40 4
Competitiveness 0.10 4 0.40 0.40

Management 4 3 0.30 4
0.10 0.40 0.40

Financial 0.15 4 0.60 0.2 0.30 3 0.45

Position

Customer 0.10 3 0.30 0.20 3 0.30

loyalty 2

Global 0.20 1 0.20 0.20 2

Expansion 1 0.40

Market Share 0.05 3 2 0.10 2 0.10

0.15

TOTAL 1.00 2.90 2.60 2.85

Product life cycle

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Product life cycle management is the succession of strategies used by business management as
a product goes through its life cycle. The condition in which a product is sold (advertising,
saturation) changes over time and must be managed as it moves through its succession of stages.
The four main stages of a product's life cycle and the accompanying characteristics are:

Introduction Stage:
In 1994 when Bestway took a start in Pakistan in under developed area of Hattar, they had to face
the ups and downs of the introduction phase. Following are the specific attributes of that stage
April 18, 2011

through which the company had to pass through:Costs of making a complete new setup were high
about US$120 million very high. The domestic economy was highly inhospitable characterized
by high interest rates, high inflation and low liquidity leading to a general economic and political
inertia. It has however successfully exhibited its managerial dynamism and technical excellence
in setting up and managing the manufacturing facilities and achieving market dominance through
its diversification strategy by investing in the local cement industry and continues to be bullish
about Pakistan.
Sales volumes to start
Even during the period of economic slowdown and recession in the country in the late 1990’s
which adversely affected the profitability of the industry Bestway was able to record pretax
profits even at 60% capacity utilization. The Company has been amongst the leaders in the recent
market boom, operating at above 100% of its installed capacity. So, they successfully created
their demand and customers were prompted to try the product as well.

Growth Phase:
In this phase in order to attain the economies of scale in its production what BestWay exactly did
they took decision in anticipation of a further hike in oil prices lead to modification of its plant to
operate on natural gas. These were the first steps in achieving a cost efficient production process
and ultimately the production process was converted to coal with a further investment of
approximately US$10 million. So, they reduce their cost due to achievement in economies of scale
Bestway Cement was listed on the Karachi Stock Exchange in February 2001 and since listing
its market capitalization has grown by approximately 85% making Bestway Cement one of the
largest companies by market capitalization. So, Public awareness increases through its listing.

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The timely and strategic decisions of the management have enabled the Company to maintain its
current market share of around 8% and its position as the lead exporter in this stage. Sales
volume leads to increase in profitability
Hattar plant’s initial capacity was 1.0 million tonnes per annum. In 2002, at a cost of US$20
million, plant capacity was enhanced to 1.15 million tonnes per annum to meet the ever
increasing demand for quality cement. But here the threats of competitors increases the most

Maturity Phase:
April 18, 2011

In this stage Bestway enjoyed more than 8% of the market share of the domestic market.
Successful introduction of its brand in Afghanistan and more recently in India, Africa and
Middle East has made Bestway one of the largest exporters of cement in Pakistan.

In April 2005, the Prime Minister of Pakistan, Mr Shaukat Aziz performed the ground breaking
ceremony for the plant. Civil works for Bestway Chakwal were initiated in January 2005, the
Kiln was fired in May 2006 and the plant went into production in June 2006 which is an industry
record. During the planning and construction phase the company took all the necessary steps to
guarantee that the plant and machinery not only met the local and international environmental
standards but also exceeded them. Because of enhanced experience in cement manufacturing
production in volumes increased a lot. Brand differentiation and feature diversification is
emphasized to maintain or increase market share due to attainment in economies of scale.

Owing to the management’s insight on growing market demand and the potential to export, in
2004 the plant’s capacity was further upgraded to 1.25 million tonnes of clinker production.
Thus, Industrial profits go down sales volume peaks and market saturation is reached

Decline Stage:

Now this is the phase through which company is passing at this particular time due to a recent
increase in marking fee that lies between Rs. 5 to Rs.6 per ton. Moreover, the company is not
able to utilize its production capacity in full it is utilizing only 60-70% of its total capacity.

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At present the freight charges are a massive 20% of the retail prices. A major threat to the
growth in this stage because the main source of revenue generation is through the export of
Moreover, recently cement industry is paying Rs. 800 per ton as FED and 16% as GST, which
comes around Rs.750/- per ton. Moreover a royalty of Rs. 10 - 15 per ton is paid to the provincial
government for using lime stone. If compared with this tax regime the marking fee of PSQCA of
around Rs. 5 - 6 is meager compared to service deliver.
April 18, 2011

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

Cost of paper sacks has gone up by almost 90% 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%. 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. So, all this accounts for a
much less sales volume. Profitability almost diminishes.

BCG MATRIX:

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April 18, 2011

As, the above diagram shows that BestWay right now has only one SBU in “Stars” that is OPC Ordinary
Portland Cement

Stars are units with a high market share in a fast-growing industry. It accounts for a total of 98% market
share. The hope is that this star will become the next cash cow. Sustaining the business unit's market
leadership may require extra cash, but this is worthwhile if that's what it takes for the unit to remain a
leader.

Dogs, All the other three BestWay’s SBU fall in this category. These three brands are “Sulphate resistant
cement”, “Quick set Cement”, “Low Alkali Cement”. They account for only 2% of the total growth. These
units typically "break even", generating barely enough cash to maintain the business's market share.
Though owning a break-even unit provides the social benefit of providing jobs and possible synergies that
assist other business units, from an accounting point of view such a unit is worthless, not generating cash
for the company. BestWay is planning to divest these recently.

PRODUCT MIX:

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April 18, 2011

25 KG BAG

1 TON JUMBO

50 KG BAG
Ordinary Portland
(OPC) ASTM-Type
III (High early
strength)

Pestle Analysis
ORDIANRY
PORTLAND
GREY,GRADE 53 N
PANACEA

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6 LB

PORTLAND
W
H
U
S
E
C
L
T
P
A
IN
QD
R
O
ST
KM
E
C
50 LB

GREY,GRADE 42.5 N
20LB

ORDIANRY PORTLAND
GREY,GRADE 43 N

ORDIANRY