Implications of the latest court decision on Pakistan’s cement industry

A major court in Lahore, Pakistan, made an important decision about cement companies in Punjab. The court said these companies must pay a 6% royalty (a type of fee) based on the price they keep after selling cement. This could affect their money flow because they’ll need to pay this fee now, which they had delayed by using bank promises (called bank guarantees). Companies like Maple Leaf Cement (MLCF), Fauji Cement (FCCL), and DG Khan Cement (DGKC) are affected.

Here’s the simple breakdown:

What’s the impact in Punjab?

• These companies were already setting aside money for this fee, so it won’t hurt them too much in the long run. But right now, they might face some cash issues because those bank promises will be turned into actual payments.

What about KPK?

• Cement companies in Khyber Pakhtunkhwa (KPK), like Kohat Cement (KOHC) and Lucky Cement (LUCK), have an advantage. They pay a much lower fee of Rs350 per ton of cement, which saves them about Rs1,000 per ton compared to Punjab companies. This could let them sell cement at lower prices or make more profit.

What’s next?

• Punjab companies might ask a higher court (the Supreme Court) to review this decision, but they haven’t decided yet.

Despite this news, experts at Topline Securities think cement companies are still a good investment. They say the industry looks promising because it’s priced fairly for the future (2026 and 2027).

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Source: Topline Securities

⚠️ This post reflects the author’s personal opinion and is for informational purposes only. It does not constitute financial advice. Investing involves risk and should be done independently. Read full disclaimer →