Pioneer Cement Limited ("PIOC" or "the Company") was incorporated in Pakistan as a public company, limited by shares, on February 09, 1986. Its shares are quoted on Pakistan Stock Exchange. The registered office of the Company is situated at 64-B/1 Gulberg-III, Lahore. The Company’s production facility is situated at Chenki, District Khushab, in Punjab Province.

After incorporation in 1986, the Company got listed on the stock exchange and officially commissioned its production line 1 in 1992. Subsequently, in 1994 the Company started its production with a capacity of 2,000 tons of clinker per day. With rising demand in the local market, the capacity of line 1 was optimized to 2,350 tons of clinker per day in 2005, along with the commencement of production line 2 in 2006 with a capacity of 4,300 tons of clinker per day. The Company undertook various upgradation projects, including commissioning of captive power plants to achieve optimal operational efficiency. The most recent expansion of the Company is the commissioning and commencement of operations from its 3rd most efficient production line in 2020 with an installed capacity of 10,000 tons of cement per day.

The main business activity of the Company is the manufacturing, marketing, and sale of cement and clinker. Installed cement manufacturing capacity of the Company is 5,194,500 tons per annum. The plant is located at Chenki, District Khushab, Punjab province. The Company sells cement under two different product categories, i.e., Ordinary Portland Cement and Sulphate Resistant Cement. Geographically, the plant is ideally located to cater to the market needs of Central and South Punjab. The Company operates through distributors, dealers, and retailers in the local market. PIOC is ISO 9001:2015 certified for Quality Management Systems, ISO 14001:2015 certified for Environmental Management Systems and ISO 45001:2018.

As of June 30, 2024, 54.53% of the Company's shareholding is owned by associated companies, undertakings, and related parties, including Vision Holding Middle East Limited (47.05%) and Imperial Developers and Builder (Pvt) Limited (2.06%), while the other minor portion is held by other related entities. The remaining shareholding is divided amongst Financial Institutions (2.96%), Modarabas and Mutual Funds (4.61%), Joint Stock Companies (21.09%), General Public (14.37%) and Other Institutions (2.44%).

There has been no change in the majority shareholding percentage held by Vision Holding Middle East Limited and Associated Companies. The Company does not have any plans for corporate restructuring or discontinuation of any business unit operations. Hence, the ownership structure is expected to remain stable in the near future.

The Company has a proven history of operating in the local cement sector, ensuring the sponsors expertise in steering the Company through various economic cycles while having a strong understanding of the sectoral dynamics. Furthermore, the key man behind the Company, Mr. M. Habibullah Khan, is the founder of Mega Group, who has expanded into various sectors and has a proven track record of successfully managing business operations.

The sponsoring entity is backed by Mega Group which is amongst the leading conglomerates of Pakistan with diverse strategic investments across multiple sectors contributing to the financial strength. Furthermore, over the years, the sponsoring group has increased their shareholding in the Company, which is a testimony to their commitment towards the growth of the Company and support in times of need.

As of June 30, 2024, the Company's Board of Directors comprises eight members, including five Non Executive, two Independent and one Executive Director. The structure and composition of the Board are as per the requirements for listed companies code of corporate governance regulations.

The Chairman of the BoD, Mr. Aly Khan, has cultivated his professional career working in global institutions, including Citi Group and Yang Ming Marine Transport Corporation, in several management and training capacities. In Pakistan, Mr. Khan has extended valuable contributions to multiple ventures through key management roles, including spearheading the construction and operation of Pakistan's first commercial L.E.E.D. Certified Building, setting up state-of-the-art cement plant, and growing one of the country's largest dairy businesses. Additionally, he has has been instrumental in partnering with BYD for the widespread adoption of EVs in Pakistan. He is also the Chairman of Haleeb Foods Ltd and a member of the board of other companies. Ms. Aleeya Khan is an architect by profession, having the experience of working in international architectural firms. As an Executive Director at Imperial Builders & Developers (Pvt.) Ltd. ("IDBL"), she has led multi-disciplinary teams from design to project completion. She also serves as a director of HUBCO and Haleeb Foods Ltd. Mr. Manzoor Ahmed is Chief Operating Officer (COO) of National Investment Trust Limited (NIT). As COO he has been successfully managing the operations and investment portfolio. He has experience of over 33 years in the mutual fund industry and has been placed in many key positions within NIT. Mr. Manzoor Ahmed has vast experience serving on the boards of various top-ranking companies in Pakistan, belonging to the diverse sectors of the economy. Mr. Mohammad Aftab Alam, a Chartered Accountant by profession, has over thirty years of diversified management experience. Working at companies such as Coca Cola and Hutchison Port Holdings, he has managed roles across several functions, including strategic business planning, finance and accounts, audit, corporate affairs, legal affairs, taxation, investment and business development. Mr. Mirza Ali Hasan Askari possesses more than thirty years of vast professional experience in various companies, including Faysal Investment Bank, Societe General, and the Bank of Credit & Commerce International (BCCI). He is a member of the Board and SECP-certified director in corporate governance. Mr. Doraib A Kisat has over 30 years of experience in Finance, Audit, and Administration and has held many senior management positions across a range of industries, including aviation, services, gas, and shipping. He is also SECP-certified in corporate governance.

The Board sets the overall strategy and direction for the management to run the Company. The Board oversees the conduct of the business and takes on the role of governance to make decisions about the direction of the Company, oversight of the business, strategic planning, decision-making, risk and control framework, regulatory compliance, and financial planning to protect and enhance the Company’s long-term and strategic value. Furthermore, the Board has formulated two committees, including the Audit Committee and Human Resource & Remuneration Committee, to assist the Board and management in matters relating to financial performance, audits, succession planning, and talent development and to ensure alignment with business objectives. The Board, along with its committees, conducted regular meetings throughout the fiscal year in the presence of the members. The Board has an evaluation process to assess its own performance, particularly in governance areas. The Board is committed to ensuring high standards of Corporate Governance and Ethical Values to preserve and maintain stakeholders’ value.

The Board has a formal policy and transparent procedures for the remuneration of directors in accordance with the Companies Act and related Regulations. The Company has a competent and independent internal audit team that evaluates the application of financial controls periodically. The Audit Committee is responsible for (i) Review of annual and interim financial statements of the Company, prior to their approval and timely dissemination, (ii) Facilitating the external audit and discussion with external auditors, (iii) Review of the scope and extent of internal audit, audit plan, and reporting framework, (iv) Ascertaining that the internal control systems, including financial and operational controls and accounting systems for timely and appropriate recording of transactions, and (v) Determination of compliance with relevant statutory requirements. To meet its requirements under the code of corporate governance for listed companies, the Board ensures complete, fair, and timely preparation and dissemination of financial statements. KPMG Taseer Hadi & Co. Chartered Accountants are the external auditors of the Company.

The Company has a lean organizational structure with the Company’s operations grouped under eight key functions, including i) Administration/HR, ii) Corporate Affairs, iii) Finance, iv) Information Technology, v) Internal Audit, vi) Marketing, vii) Production, and viii) Supply Chain.

The Company has employed a competent and committed management team. Mr. Habibullah was appointed as the CEO of the Company on July 1, 2023. He is the Founder and Chairman of Mega Conglomerate. The Mega & Forbes Group of Companies (Mega Group - MFG ) is a diversified conglomerate, with business holdings including two of the largest container terminals with land side facilities value addition rail-link to ICDs in the country , third largest dairy producer (FMCG), top tier cement manufacturing company, vertically integrated shipping & logistic company, majority ownership of Pakistan's largest independent power producer / energy utility / mining, oil & gas / E & P sector, fintech and a progressive real-estate developer and currently introducing a new line of business of electric vehicles with BYD Auto Industry Limited in Pakistan under Mega Motor Company (Private) Limited. Mr. Waqar Naeem is a fellow member of the Institute of Chartered Accountants of Pakistan. He carries over 25 years of experience and has been associated with the cement industry for over 20 years, including 16 years in senior management positions. He joined Pioneer Cement in May 2012 and continues to hold the position of Chief Financial Officer. Muhammad Sohail Anjum is a mechanical engineer by profession and brings over 25 years of hands-on experience in the international and national cement industry. He contributed as a Director Expert with the Lafarge Group in Africa, Middle East, Asia, and Eastern Europe to improve the cement industry's performance across 44 countries. Mr. Sohail joined Pioneer Cement in August 2019 as Head of Works and is currently the GM (Technical). Gajan Buriro, a mechanical engineer by profession, brings more than 30 years of experience in national and multinational organizations, Oil & Gas, Power Generation and Cement, specializing in the operation & maintenance of gas turbines, steam turbines, and HRSG. He joined Pioneer Cement in December 2022 as GM (Works). Mr. Gajan Buriro (GM-Works) is an experienced professional with over thirty years of diverse industry experience in various roles. Mr. Buriro’s extensive experience and expertise in management and operations of plant make him a valuable asset to Pioneer Cement Limited.

The management is responsible for the day-to-day operations of the Company including the preparation of financial statements. The responsibilities are divided amongst the divisions with proper reporting lines to ensure smooth decision-making. Each divisional head reports to the CEO, who in turn reports to the BoD. The internal audit function reports directly to the Audit Committee.

Specific to the cement sector, the Company has set up the Central Control Room (CCR) that integrates the advanced technologies to control the complete manufacturing process and to monitor equipment performance. The MIS department of the Company has separately prepared an IT-related disaster recovery and business continuity plan.  The Company has deployed Oracle Systems' cutting-edge Enterprise Resource Planning (ERP) solution, empowering management to make informed decisions with timely, accurate, and structured data. This modular, fully integrated system streamlines our entire operations landscape, encompassing (i) attendance and payroll management, (ii) customer order fulfillment and invoicing, (iii) procurement to payment processing, (iv) asset tracking and management, (v) inventory and cost management, and (vi) financial reporting.

The Company's risk management team is responsible for identifying and prioritizing strategic, financial, operational, legal, and external risks and establishing controls to mitigate those risks. The Risk Management Team investigates potential risks by reviewing both internal and external indicators and challenges and the key factors that may impact the business in the context of the environment in which the Company operates. The Board of Directors is regularly informed of risks towards future performance, solvency, and liquidity of the Company. Comprehensive IT policies and procedures are in place to regulate quality assurance, data and system ownership, information security, and responsibility segregation. The Risk Management Team ensures that IT-related investments are evaluated, selected, and funded effectively in accordance with business needs.

The local cement industry faced significant challenges throughout FY24, primarily due to the country's economic difficulties, including high inflation, soaring interest rates, and reduced developmental activity. Additionally, political instability led to lower Public Sector Development Program (PSDP) spending, compounding the challenges faced by the construction sector, which was already struggling with rising input costs. Despite these challenges, the cement industry in Pakistan witnessed marginal growth of ~1.6%, reaching 45.3mln MT during the year ending June 30, 2024, compared to 44.6mln MT last year. Although the local sale volumes declined by 5% (FY24: 38.2mln MT, FY23: 40.0mln MT), the overall surge was driven by a significant rise in export dispatches of 56%, reaching 7.1mln MT, up from 4.6mln MT last year. A similar trend was witnessed during 1HFY25, with the local dispatches recording a decline of ~10.5% (1HFY25: 18.12mln MT, 1HFY24: 20.24mln MT), while export dispatches grew by ~31% (1HFY25: 4.81mln MT, 1HFY24: 3.66mln MT). During, 9MFY25, the industry volumes decreased by ~1.48% to 34mln MT from 34.5mln MT during 9MFY24. Local dispatches decreased by ~ 6.5% to 27.46mln MT as compared to 29.40mln MT during 9MFY24. However, Export dispatches increased to 6.53mln MT (~28%) from 5.10mln MT during 9MFY24. The increase is mainly on account of surge in cement exports due to the exploration of global market after a decline was witnessed in the local demand.

Despite the decline in sales volumes, the local cement manufacturers are witnessing a rising trend in their recorded revenues due to the higher prices reflecting the increase in the cost of production that is being passed on to the consumers. As a result, cement manufacturers have successfully maintained their margins. The industry also witnessed a rise in installed capacity, which now stands at approx. 85mln MT per annum.

However, based on the stressed demand, the capacity utilization remained between 50-55% during FY24. Going forward, FY25 brings some relief for the industry in the form of consistent reduction in policy rates, declining inflation, a stable exchange rate, and gradual increases in SBP reserves along with political stability. However, the development activity in the form of construction projects to stimulate the economy is still on hold.

During FY24 and 3QFY25, the Company supplied 2.362 million MT and 1.542 million MT of cement, respectively, to the local market. Pioneer Cement is the sixth largest local player in the country, with a market share of ~6.2% in the country’s installed cement capacity. It has a well-established distribution network nationwide, with a particularly strong presence in the North region and Central Punjab.

The Company experienced a decline of 1.79% in net sales during FY24 (FY24: 35,519 million; FY23: 36,165 million) and 9.80% in 3QFY25 (3QFY25: 24,691 million; 3QFY24: 27,375 million), primarily due to a 12.64% and 15.97% reduction in cement sales volume, respectively. However, these declines were largely offset by a cost-driven increase in sale prices, reflecting the impact of additional costs passed on to customers.

The Company has consistently improved its margins through effective cost control measures and better retention prices. This improvement is primarily driven initiatives undertaken by the management. Key contributors include increased use of local coal, higher reliance on self-generated power, and fixed cost optimization. As a result, the Gross Profit Margin improved to 32.9% in 3QFY25 (FY24: 33.1%, FY23: 26%). Net Profit Margin also showed improvement, reaching 15.2% in 3QFY25 (FY24: 14.6%, FY23: 7.2%) supported by the timely repayment of project-related loans, reduced leverage, and the positive impact of declining policy rates on the bottom line.

The management is committed to improving the financial performance of the Company through cost optimization measures and efficient utilization of the plant while maintaining their market share in the local cement industry. The sponsors are also actively undertaking initiatives to reduce risks posing a threat to the business, including increasing investment in captive power generation and reducing the dependency on the national grid.

The Company finances its operations through a combination of internally generated cash and effective working capital management, diversifying its funding sources to mitigate risk. In FY24, inventory days increased due to lower sales volumes, resulting in gross working capital days rising to 46 as of June 30, 2024, compared to 36 days in the previous year. This trend continued, with the average days further increasing to 53 by the end of March 2025. To bridge any financing gaps, the Company has secured adequate working capital facilities. As March 2025, its outstanding short-term borrowings, stood at PKR 4,922 mln.

During the period, a continuous decline in policy rates from their peak, coupled with the repayment of long-term loans, resulted in lower finance costs for the Company. Additionally, the Company's FCFO for 3QFY24 reached PKR 7,827 million, reflecting an improvement from the previous year and demonstrating strong operational performance. The Company's interest coverage ratio (EBITDA/finance cost) stood at 5.0x as of June 30, 2024, further improving to 8.5x in 3QFY25.

The Company has been actively deleveraging its balance sheet after securing loans for the new production line along with the installation of a waste heat recovery power plant and a coal-fired power plant. As of March 2025, total borrowings stood at PKR 9,359 million, bringing the leverage ratio down to 16.9% in March 2025 from 18.7% at the end of June 2024.