KARACHI, Jan 18: Chakwal Cement Company Limited would go into commercial production early next year, as the new owners -- Orascom, the Egyptian giant, is understood to have started infrastructure build up through Descon Engineering and civil works through Gammon Pakistan Limited.

Following the purchase of 51 per cent controlling shares in Chakwal Cement Company Limited (CHKC) from the Chakwal Group of Industries late last year, the buyer Orascom Group had planned an initial investment of $100 million in the cement project.

A senior delegation of Orascom Telecom SAE, led by the company's chairman Naquib Sawris had met Prime Minister Shaukat Aziz in Islamabad on October 22 and disclosed the Egyptian group's interest in the cement industry through the purchase of majority shares in Chakwal Cement.

With the production capacity of 2.2 million tons per annum, Chakwal Cement would possibly be one of the three largest cement plants in the country. But beyond the fact of change of management -- which much of the market knows - and was also reported in Oct-Dec 2004 quarterly report by Taurus Securities that stated: "(The Chakwal Cement plant) has equipment, attempting to arrange financing to bring plant on line", the market is generally unaware of the latest development.

Due mainly to the lack of knowledge in the progress about the construction of the plant, the share in Chakwal Cement is currently trading at ridiculously low price of around Rs9 per share.

Compared to that some of its peers such as D.G. Khan Cement holds the short-term target price of Rs64.50 and Cherat Cement as high as Rs105, for the 10-rupee share. The important information missing is the price at which 51 per cent shares were sold by the Chakwal Group to Orascom.

That ought to have been disclosed in the interest of transparency and good corporate governance, either by the buyer or seller. Chakwal Cement was originally envisaged to begin commercial production by October 1997 but the project stumbled following financial constraints, which resulted in prolonged delay in the clearance of imported plant from Karachi Port.

Industry insiders told Dawn on Tuesday that the new owners had been able to raise required funds through a consortium led by a major foreign bank, though the officials of the bank declined to comment on individual clients.

Gammon Pakistan Limited, the construction giant of the yesteryear, which has been awarded the civil construction contract showed no such inhibitions. In the company's last quarterly report ended September 30, 2004, Mian Mohammad Arif, company chief executive confirmed: "Memorandum of Understanding (MoU) for construction of Chakwal Cement Factory has been signed with the new management of Chakwal Cement Company Limited for approximately Rs110 million".

The principal activity of Gammon Pakistan is to execute civil construction works. And reliable market sources affirmed that the project work on infrastructure build up was being carried out by Descon Engineering Works.

A. Razzak Dawood, the former minister of commerce, industry & production, is the chairman of Descon Engineering Services. Calls made to Khawaja Javed, CEO of Descon Engineering Works at Lahore, were not returned.

The company web site shows that it operates globally and provides full range of construction services, encompassing civil construction, mechanical erection and electrical and other works for power, oil, gas, fertilizer, chemical, petrochemical and cement industries.

As for the new owners, the Orascom Group, it claims to be one of Egypt's largest construction and building materials companies. The group prides on having undertaken numerous major infrastructure, industrial and tourism projects including the world's largest swing bridge over the Suez. In Pakistan, Orascom Group has invested close to $1 billion in cellular company, Mobilink GSM.