DGKC’s subsidiary to launch “Milkfields” in coming days

November 24, 2021 (MLN): D.G. Khan Cement Company Limited (DGKC)’s subsidiary Nishat Dairy Private Limited is all set to launch a new product called “Milkfields” under the joint venture with Turkish brand Sutas, whose marketing campaign will be initiated in next few days, company’s management informed during a corporate briefing session with investors.

DGKC has two subsidiaries Nishat Paper Products Company Limited (NPPCL) and Nishat Dairy Private Limited with a shareholding of 55% and 55.1% respectively.

To recall, the company reported unconsolidated net profits of Rs3.72bn in FY21 against a loss of Rs2.1bn during FY20. Along with results company also announced a final cash dividend of Rs1/share.

With the recent addition of a 30MW Coal-Fired Power Plant (CFPP), DGKC’s Hub facility has now become self-sufficient in power generation. To note, DGKC added 10MW Waste Heat Recovery Plant (WHR) in early 3QFY21.

Regarding coal prices, it was revealed that the company’s latest coal shipment costed around US$180/ton (FOB) which was not completely passed on while the average in-land transportation cost is around Rs1,000-4,800/ton, depending on plant location. So, the companies will not slash prices as they were not raised enough to completely pass on costs, management said.

Currently, the company has a coal inventory of an average $150-155/ton with 30-40 days inventory on hand. The company recently booked 2 consignments of coal at $142/ton, which covers them until Jan’22. Thus, based on current inventory, power generation from coal is costing around Rs16-17/kWh which is lower than the national grid as grid cost stands at around Rs22/unit for north and Rs24/unit for South.

On the export front, Cement export prices are hovering in the range of $33-36 per ton while the clinker is at $46-47per ton. As per the management company has received a cement order at the price of $38 per ton.

Furthermore, management expects the local demand to grow by 5-7% in FY22. However, the expected cut in the PSDP budget might result in a lower than 5% growth in dispatches.

Commenting on the news regarding taxes on underutilized cement plants, management said that they have deferred expansion plans due to this and are waiting for further clarity. However, they believe there must be a benchmark and different tax slabs in order to execute this. In addition, management said that they plan to retire around 25% of their debt during FY22.

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