PACRA Maintains Entity Ratings of Gharibwal Cement Limited

Gharibwal Cement Limited’s assigned rating reflects its position as a mid-tier cement producer, supported by modernized facilities, improving energy efficiency, and a stable ownership structure with proven business capability. The Company primarily caters to markets in close proximity to its plant located in Ismailwal, District Chakwal, supporting logistical efficiency and cost control. The cement sector remained under pressure during FY25 due to constrained development spending and subdued construction activity; however, industry conditions began to stabilize toward the end of the year. Total industry sales increased by 2.1% to 46.2 million tons, driven mainly by a 30% growth in exports to 2.1 million tons, while domestic dispatches declined. Capacity utilization remained broadly stable at around 61%. Early FY26 indicators signal improving momentum, with 1QFY26 industry dispatches rising on the back of 15.8% growth in domestic sales and 20.8% growth in exports. During FY25, the Company achieved total dispatches of 1.220 million tons compared to 1.193 million tons last year, reflecting a modest year-on-year increase of 2.3%. In 1QFY26, dispatches rose by 23% to 317,363 tons versus 257,464 tons in the same period last year. The kiln remained under a planned shutdown during the quarter due to sufficient clinker inventory, resulting in under-absorption of fixed costs and a temporary decline in profitability, with gross and net margins falling to 13.3% and 5.6%, respectively, from 27.2% and 12.4% in 1QFY25. Following recent industry consolidation, the Company’s capacity remains comparatively lower, and in order to remain competitive in the industry, maintaining cost-efficient operations is a key consideration. To support this, management is actively focused on enhancing operational efficiency, as reflected in ongoing BMR initiatives, the installation of a 24.5 MW solar power plant, and implementation of a cooler system reducing coal consumption by 2–3%. The Company has also adopted a phased expansion strategy, reflected in substantial capital work-in-progress. A few machinery items have already been imported and are available on-site, while the main mill and other machinery will be imported once industry capacity utilization improves. With this expansion leverage is expected to increase going forward. The Company maintains a strong equity base of PKR 24.9 billion in FY25 and PKR 26.1 billion in 1QFY26, with low leverage of 3.1%. The Company has also successfully transitioned to Microsoft Dynamics 365 ERP effective July 1, 2025, and recently appointed Mr. Ali Rashid Khan as director in place of Mr. Abdur Rafique Khan.
Industry demand is expected to remain on an upward trajectory, as reflected in 1QFY26 performance, supported by easing interest rates and a gradual pickup in construction activity. The local cement industry is projected to grow by 8%–9% over the near term. The assigned rating reflects management’s strong commitment to enhancing the Company’s performance, evidenced by a sustained market position, and ongoing improvements in operational efficiency.

About the Entity
Gharibwal Cement Limited (GWLC) operates a cement manufacturing facility with an installed capacity of 2.25 million tons per annum. The Company is majority-owned by Mr. Tousif Peracha (56.4%), founder of the Gharibwal Group, followed by the Rafique Khan Family (33.5%). GWLC is governed by a nine-member Board of Directors, comprising three independent, three non-executive, and three executive directors. The Chief Executive Officer, Mr. Tousif Peracha, is supported by a seasoned management team with longstanding associations with the Company.