{"id":10914,"date":"2025-08-05T15:26:34","date_gmt":"2025-08-05T10:26:34","guid":{"rendered":"https:\/\/ksestocks.com\/blog\/?p=10914"},"modified":"2025-08-05T15:26:35","modified_gmt":"2025-08-05T10:26:35","slug":"kohat-cement-is-cutting-power-costs-and-its-paying-off","status":"publish","type":"post","link":"https:\/\/ksestocks.com\/blog\/kohat-cement-is-cutting-power-costs-and-its-paying-off\/","title":{"rendered":"Kohat Cement Is Cutting Power Costs, and It’s Paying Off!"},"content":{"rendered":"\n

Cement manufacturing uses a lot<\/em> of electricity, and for companies like Kohat Cement (KOHC<\/a>)<\/strong>, rising electricity prices have become a big challenge. But instead of just absorbing the cost, KOHC is taking bold steps to bring those bills down, and it’s already making a difference in profitability.<\/p>\n\n\n\n

Let\u2019s break it down.<\/p>\n\n\n\n

Reducing dependence on expensive grid electricity<\/h2>\n\n\n\n

Until recently, KOHC relied heavily on the national grid for power. But with grid electricity now costing PKR 38\u201340 per unit (kWh)<\/strong>, that strategy has become too expensive.<\/p>\n\n\n\n

To fix this, the company is:<\/p>\n\n\n\n

    \n
  • Building a new 30MW coal-fired power plant<\/strong><\/li>\n\n\n\n
  • Total investment: PKR 9 billion<\/strong><\/li>\n\n\n\n
  • Expected to start operations in 4QCY26<\/strong><\/li>\n\n\n\n
  • Will reduce power cost to just PKR 18\u201320 per unit<\/strong><\/li>\n<\/ul>\n\n\n\n

    Once online, this will bring estimated savings of PKR 5.3\/share annually<\/strong>, a big boost for shareholders.<\/p>\n\n\n\n

    This new plant will take KOHC\u2019s total coal-based captive power capacity to 35MW<\/strong>, cutting their dependence on the national grid and shielding them from future tariff hikes.<\/p>\n\n\n\n

    Going green too: more solar power<\/h2>\n\n\n\n

    KOHC isn’t only relying on coal. It\u2019s also increasing its use of renewable energy<\/strong>.<\/p>\n\n\n\n

      \n
    • Current solar capacity: 15MW<\/strong><\/li>\n\n\n\n
    • Target solar capacity: 20MW<\/strong><\/li>\n<\/ul>\n\n\n\n

      With this shift, KOHC’s current power mix<\/strong> looks like:<\/p>\n\n\n\n

        \n
      • 67% captive (in-house generation)<\/strong><\/li>\n\n\n\n
      • 33% grid (national supply)<\/strong><\/li>\n<\/ul>\n\n\n\n

        This is not only cost-effective but also environmentally responsible.<\/p>\n\n\n\n

        Smarter coal use = bigger profits<\/h2>\n\n\n\n

        In the first 9 months of FY25, KOHC\u2019s gross profit margins<\/strong> jumped from 28% to 42%<\/strong>, a major improvement.<\/p>\n\n\n\n

        How did they do it?<\/p>\n\n\n\n

          \n
        1. Lower coal prices<\/strong> helped overall<\/li>\n\n\n\n
        2. KOHC switched more of its coal supply from imported to local<\/strong>\n
            \n
          • Previous mix: 70% imported \/ 30% local<\/strong><\/li>\n\n\n\n
          • New mix: 40% imported \/ 60% local<\/strong><\/li>\n<\/ul>\n<\/li>\n<\/ol>\n\n\n\n

            This strategic move saved money on both coal costs and shipping<\/strong>.<\/p>\n\n\n\n

            KPK advantage: lower raw material duties<\/h2>\n\n\n\n

            KOHC operates out of Khyber Pakhtunkhwa (KPK)<\/strong>, where cement producers get a raw material duty break.<\/p>\n\n\n\n

              \n
            • KOHC paid only PKR 250\/ton<\/strong>, much lower than producers in Punjab<\/li>\n\n\n\n
            • The KPK government has raised this to PKR 350\/ton<\/strong>, with a small annual increase over the next 5 years<\/li>\n\n\n\n
            • Even after the increase, it\u2019s still much cheaper than Punjab<\/strong>, where companies pay 6% of the ex-factory price<\/strong><\/li>\n<\/ul>\n\n\n\n

              This cost advantage is another reason KOHC\u2019s margins are doing well.<\/p>\n\n\n\n

              In summary<\/h2>\n\n\n\n

              Kohat Cement is making smart, forward-looking changes to stay competitive:<\/p>\n\n\n\n

                \n
              • Cutting electricity costs with a new coal plant<\/li>\n\n\n\n
              • Expanding solar power<\/li>\n\n\n\n
              • Using more local coal to save on imports<\/li>\n\n\n\n
              • Leveraging KPK’s lower raw material duty<\/li>\n<\/ul>\n\n\n\n

                All of this means lower costs, stronger margins<\/strong>, and potentially better returns for investors<\/strong> in the long run.<\/p>\n\n\n\n

                As energy costs rise and pressure builds on the manufacturing sector, companies like KOHC that act early will be better positioned for a profitable future.<\/p>\n\n\n\n

                Source: Insight Securities<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

                Cement manufacturing uses a lot of electricity, and for companies like Kohat Cement (KOHC), rising electricity prices have become a big challenge. But instead of just absorbing the cost, KOHC is taking bold steps to bring those bills down, and it’s already making a difference in profitability.<\/p>\n","protected":false},"author":9252,"featured_media":6820,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[154,155],"tags":[45],"class_list":["post-10914","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analysis","category-fundamental-analysis","tag-kohc"],"featured_image_src":{"landsacpe":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2024\/11\/KOHC-STOCK-PSX-1140x445.png",1140,445,true],"list":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2024\/11\/KOHC-STOCK-PSX-463x348.png",463,348,true],"medium":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2024\/11\/KOHC-STOCK-PSX-300x188.png",300,188,true],"full":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2024\/11\/KOHC-STOCK-PSX.png",1920,1200,false]},"_links":{"self":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts\/10914","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/users\/9252"}],"replies":[{"embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/comments?post=10914"}],"version-history":[{"count":1,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts\/10914\/revisions"}],"predecessor-version":[{"id":10915,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts\/10914\/revisions\/10915"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/media\/6820"}],"wp:attachment":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/media?parent=10914"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/categories?post=10914"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/tags?post=10914"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}