Lucky Cement Limited (Lucky), Pakistan's largest cement company, has signed a Memorandum of Understanding (MoU) with Noor Financial Investment Company (Noor), based in Kuwait to supply clinker for a period of 5 years. Noor is a Kuwaiti investment company engaged in investment and financial activities, primarily in Kuwait, the Middle East, Asia and other emerging markets.
It is the financial arm of the National Industries Group (NIG), which is one of the largest and best-performing industrial conglomerates in the Middle East. One of NIG's subsidiaries is National Industries Company (NIC), which specialises in manufacturing and marketing building materials and infrastructure products.
NIC has the largest industrial complex for construction materials in the Middle East and the largest market share for building materials in Kuwait. Noor is actively pursuing investment and joint venture opportunities in Pakistan and has to date made significant investments in the country through its acquisitions in financial services and power sector and stock investments at Karachi Stock Exchange.
This MoU will allow Lucky to increase its growing exports to the Middle East under a guaranteed off-take arrangement. Lucky, which announced last week that it had raised US $109.3m through a GDR offering to international investors, is Pakistan's largest manufacturer and exporter of cement and this MoU will further strengthen its dominant position.
The Middle East is undergoing a construction boom and countries like UAE, Kuwait, Iraq and Qatar are severely deficient of cement. Pakistan, with its growing cement industry, is an excellent source for supply of cement to these countries due to its close proximity to the region. Lucky is ideally placed in this context due to the location of its southern plant at a short distance of 60 km from Karachi Port from where most of the exports take place. It is also the only cement exporter in Pakistan that has infrastructure at Karachi Port for the storage, handling and loading of loose cement.
Cognisant of the growing demand for cement from the region as well as in Pakistan, Lucky is also in the process of increasing its manufacturing capacity by 1.25 million metric tons per annum to 7.75 million metric tons per annum. This additional capacity is due to come online by December 2008 and is fully funded through the proceeds of the recently issued GDRs. Merrill Lynch and KASB assisted Lucky Cement Limited in this MoU agreement.
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