KARACHI, March 28: D.G. Khan Cement has started to run grinding mills at its expansion plant at Chakwal and make trial dispatches from Monday. “We have dispatched 530 tons per day during the last two days since March 26,” Inayatullah Niazi, Chief Financial Oficer (CFO) of the company, said on Wednesday.

He said the company’s plant at D.G. Khan did not have enough clinker grinding facility to meet the increasing demand and the new grinding mills at Chakwal were commissioned to augment its efforts.

Capacity expansion project would be fully commissioned as per schedule in mid-April, Niazi said.The company is pursuing expansion of 7000 tons per day at Khairpur, Kalar Kahar, District Chakwal.

Upon completion, the total production capacity of the company would reach 14,000 tons per day (4.2m tons per annum). The project cost has been estimated to be Rs14.5bn. Cement sector analysts have been worried over huge expansions by several cement mills which would create supply glut in the market. But Mr Niazi thought that there was no reason to be concerned for the present.

“March to October are the best months for construction and cement sales,” he stated, though dispatches could slow down during monsoons in July.

The industry’s capacity utilisation during March had been around the average of 110 per cent and the D.G. Khan CFO expected March dispatch numbers (likely to be released by the All-Pakistan Cement Manufacturers’ Association in the first week of April) to show increase of 36 per cent over the same month last year. Price of cement, he said, was stable at Rs225 to Rs230 per bag.

Due to cut-throat competition among producers and the government’s pressure on mills to reduce prices, most cement companies had posted earnings drop during the first half of financial year 2007. DGKC’s after-tax earnings had portrayed a 25 per cent YoY decline during first half of fiscal year 2007 to Rs855m compared to Rs1,132m last year.