UNDER the fold of Sir Mohammed Anwar Pervez, the Bestway group is a global conglomerate that is considered among the top 20 privately owned companies in the UK and the 12 largest family-owned businesses. It is also among the largest overseas Pakistani investors in Pakistan.

But for all that, Bestway Cement, a group company, maintains a low profile. Even though the company is listed on the stock exchanges, it is not of much interest to major brokerage analysts, mainly due to its small free-float.

Its paid-up share capital stands at Rs5.8bn, comprising 579m shares of Rs10 par value each. Of these, the parent company — Bestway (Holdings) Limited, UK — holds 320m shares or a 55.32pc stake, with another 41.4m shares held by nominee directors.

The company’s daily stock turnover hardly goes past the 50,000-share mark, and mostly remains below 10,000 shares. Yet, the stock is among half a dozen on the cement sector that are quoted at above Rs100. It closed last Thursday at Rs127.81 a share.

Bestway Cement had grabbed the spotlight in April it had sealed the deal for buying 75.86pc of Lafarge Pakistan Cement Limited’s (LPCL) shares. Safimo SAS, which had a majority holding in Lafarge, was bought by Bestway for $218m. The sale price corresponded with an enterprise value of 100pc at $329m.

In his report for the quarter ending March 31, Bestway Cement’s CEO Zameer Mohammed Choudrey mentioned that LPCL owned a state-of-the art 2.4m tonnes per annum cement plant in Chakwal district, Punjab.

“LPCL’s acquisition resulted in the Bestway Group’s total capacity increasing to over 8m tonnes per annum, making it the largest cement producer in the country,” the CEO affirmed. The acquisition will also enable it to offer a wider range of brands and products, giving it a strategic advantage over its competitors.

Lafarge’s total number of issued shares stood at 1.45bn. The sale-purchase deal was sealed for 1.1bn shares, constituting 75.86pc of the company’s paid-up capital. Bestway Cement also acquired a further 12.07pc of the LPCL stock through the public offering process, taking its cumulative shareholding in Lafarge to 87.93pc.

And Bestway Cement’s quest for acquisition has not ended. The company was believed to be considering acquiring the Abu Dhabi Group’s entire 12.23pc shareholding in UBL Insurers Limited at a price subject to negotiations. By March 31, Bestway (Holdings) Limited and United Bank Limited, associated companies of Bestway Cement, jointly held an 85.60pc stake in UBL Insurers, along with management control.

The company has been visualising the future with cautious optimism. CEO Choudrey mused that the increasing power tariffs and general inflation are likely to increase the cost of production. But shareholders were assured that the company would be able to absorb the cost increases better than its competitors as it among the lowest cost producers in the country. Coal prices are also expected to remain fairly stable and interest rates to stay relatively low in the near future.

“These, along with higher domestic demand due to rising infrastructure development in the country, should enable the company maintain healthy profit margins,” the directors said in their quarterly report.

With regards to exports, Bestway claims to be a leading brand in Afghanistan and India, and it has been striving to expand its share in these markets. As it joined the few cement entities in the country that have acquired the EC Certificate of Conformity, its directors said they would continue to pursue export opportunities in regional and international markets.

By March 31, Bestway Cement had a Rs45.6bn-sized balance sheet. On the asset side, apart from Rs24.7bn in property, plant and equipment, it had ‘long-term investments’ of Rs10.8bn. It held Rs7.9bn worth of UBL stock, and also carried an ‘unappropriated profit’ of Rs20.2bn.

For the nine months ending March, the company recorded an after-tax profit of Rs6.2bn on turnover of Rs22bn, up from net earnings of Rs5.9bn on turnover at Rs20.7bn in the corresponding period of the previous year.

Going forward, the company has its heart set on setting up two waste heat recovery projects. Its directors said the work on the power plants at Hattar and Farooqia of 7.5MV and 6MV capacities was progressing at full pace, and the projects were expected to be completed soon.

“These projects will significantly reduce the company’s dependence on external sources of electricity, resulting in appreciable reduction in the cost of production,” they said. Investors await a status report on the projects as the company unveils its FY15 results in the coming weeks.

Published in Dawn, Economic & Business, July 6th, 2015

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