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Attock looking to acquire Al-Abbas Cement

World Cement,

Press reports from Karachi indicate that Attock Cement plans to purchase 74% shares of Al-Abbas Cement, a company that has been badly hit by a slowdown in the country’s construction industry. Babar Bashir Nawaz, CEO of Attock Cement ,is quoted as saying that the takeover of Al-Abbas will consolidate his company’s position in the market. Attock has a strong share in the southern market.

An analyst at Invisor Securities ,Wasi Mehdi, said that the takeover of the relatively weaker Al-Abbas will give an edge to Attock Cement. “There is already a glut in the market so adding new capacity does not make sense. For Attock, a takeover will increase sales and raise profits.”

Al-Abbas posted a loss of Rs247 million in July-December 2009 following a slide in cement prices and lower consumption in the domestic and international markets. The company receives most of its revenues from export sales. Attock Cement also saw its profits drop by 13.4% in the same period as the Competition Commission forced manufacturers to break the price cartel. The Competition Ordinance lapsed on 26 March and this is likely to push prices up by 10 – 15 % during April – June 2010.The current average price of RS280 per 50 kg bag is likely to rise to Rs320.

At the same time the government has started giving an inland freight subsidy of 35% for transportation costs to the cement manufacturers in the northern part of the country.

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