Cherat Cement Company Limited (“Cherat Cement” or “the Company”) is a public limited company incorporated in Pakistan in 1981 and commenced commercial production in 1985. The Company is listed on the Pakistan Stock Exchange and forms part of the Ghulam Faruque Group (GFG), a well-established industrial group with diversified businesses across Pakistan. Cherat Cement operates through its head office located at Modern Motors House, Beaumont Road, Karachi, and its integrated manufacturing facility situated at Village Lakrai, District Nowshera. The Company adheres to the Companies Act 2017, SECP regulations, IFRS, environmental compliance standards, and the Code of Corporate Governance.

The Ghulam Faruque Group (GFG) traces its origins to 1964 with the establishment of Faruque (Private) Limited by the late Mr. Ghulam Faruque. Following his demise, stewardship of the Group transitioned to his five sons, who broadened and consolidated the Group’s industrial footprint. The third generation now oversees the Group’s business interests and continues to hold relatively equal financial stakes in Faruque (Pvt.) Limited, ensuring continuity of ownership, governance stability, and a unified strategic direction. Over the decades, GFG has evolved into a diversified conglomerate with a strong presence across key sectors, including cement, sugar, packaging, software development, HVAC systems, engineering equipment, and CNG solutions. Its principal companies, such as Cherat Cement Company Limited, Mirpurkhas Sugar Mills, Cherat Packaging, Greaves Pakistan, Unicol Limited, and Zensoft, demonstrate the Group’s commitment to operational excellence, technological advancement, and long-term value creation. Through sustained investments, modernization, and prudent management, GFG has established itself as a reputable and influential contributor to Pakistan’s industrial and economic landscape.

Cherat Cement is engaged in the manufacturing, marketing, and sale of high-quality cement products, primarily Ordinary Portland Cement (OPC) under the flagship brand “Cherat,” along with composite cement marketed as “Khyber.” With an installed production capacity of 4.5 million tons per annum, the Company holds approximately 7% market share and remains a key player in the northern region. Its Nowshera plant’s strategic location enables efficient supply to Punjab, Khyber Pakhtunkhwa (KPK), FATA, and Azad Jammu & Kashmir, while also supporting exports to Afghanistan. Cherat’s products are recognized for superior quality and consistency, contributing to the brand’s premium market positioning. The Company continues to enhance operational efficiency through modern technologies such as Waste Heat Recovery, solar power generation, and optimized fuel and power mixes, strengthening its cost competitiveness and environmental sustainability.

Ghulam Faruque Group (GFG) holds a significant ownership stake in Cherat Cement, primarily through associated companies and family members. FARUQUE (PRIVATE) LIMITED, a key associated company of GFG, holds 21.67% of the shares. Additionally, other associated companies and family members hold substantial stakes, including direct holdings by directors and their spouses, collectively representing a major portion of ownership. Financial institutions and mutual funds together hold approximately 24.05% of the shares, with banks and insurance companies contributing notably to this segment. The general public owns around 29.77% of the shares, with local shareholders making up the largest portion. Founded in 1964, GFG functions as the parent company and main investment arm of the Group, playing a pivotal role in steering the strategic direction of Cherat Cement and maintaining a diversified portfolio across various sectors.

Currently, the third generation is leading the operations of Ghulam Faruque Group (GFG) and its associated companies. As a result, the ownership structure is expected to remain stable and unchanged in the foreseeable future, with the family continuing to play a central role in the Group's leadership and strategic direction.

The sponsors of the company exhibit exceptional business acumen, underpinned by decades of diversified experience across multiple sectors through the Ghulam Faruque Group (GFG). The Group has built a strong reputation for strategic investment and operational excellence, demonstrating an ability to identify and capitalize on growth opportunities in competitive markets. Mirpurkhas Sugar Mills Limited, established in 1964 and located near Karachi, is a key entity with a crushing capacity of 12,500 tons per day, recognized as one of the most efficient sugar mills in Pakistan. The company’s commitment to innovation is evident in its development of high-yield sugarcane varieties and its recent successful expansion into paper and board manufacturing with a 250 MTPD capacity, launched in 2023, enhancing synergies and driving diversified revenue streams. Cherat Packaging Limited, founded in 1991, further strengthens the Group’s industrial portfolio as the leading manufacturer and supplier of Kraft paper, polypropylene bags, and flexible packaging products, notably servicing the cement industry’s packaging needs with reliability and innovation. Cherat Cement Company Limited stands as a flagship within the Group, embodying GFG’s vision and operational prowess. Since its inception in 1981, Cherat Cement has grown into one of Pakistan’s premier cement manufacturers, leveraging advanced technology and efficient processes to produce over 4.5 million tons of clinker annually. Its strategic geographic location enables strong domestic distribution while tapping into regional export markets amid growing infrastructure demands. The company’s leadership consistently drives capacity expansion, quality enhancement, and sustainability initiatives, ensuring competitive advantage and resilience. Cherat Cement’s robust financial position, diversified customer base, and prudent risk management reflect the sponsors’ deep understanding of market dynamics and long-term value creation. Beyond manufacturing, GFG’s diversified interests span software solutions, air conditioning, CNG installation, and engineering parts sales and servicing, reflecting a dynamic business model that balances innovation with stability. The Group’s integrated approach, combining operational efficiency with strategic diversification, underscores its commitment to sustained growth, making it a prominent contributor to Pakistan’s industrial landscape.

The financial strength of the group is considered robust, primarily due to its association with GFG. In FY25, the group reported significant financial performance, with total revenue of PKR 99.24 billion. This solid financial foundation underscores the group’s strong market position and capacity for sustained growth.

The overall control of the Company vests in eight-member board of directors (BoD), including the CEO. The BoD comprises three non-executive directors, three independent directors and two executive directors inclusive of one female director. Three of them are Ghulam Faruque family members, including the CEO.

Mr. Omar Faruque serves as the Chairman of the Board and is a representative of GFG. He holds a B.A. in Finance from Polytechnic London and has been a member of the board since January 2013. In addition to his role at Cherat Cement, Mr. Omar Faruque is the CEO of Zensoft (Pvt.) Limited and a director at Greaves CNG (Pvt.) Limited and Greaves Airconditioning (Pvt.) Ltd., both of which are associated companies of Cherat Cement. The Company benefits from a balanced and professional board composed of highly qualified members with diverse business expertise. The strong business acumen and technical expertise of the board members contribute significantly to the Company's high standards of governance and strategic direction.

The minutes of the board meetings demonstrate high attendance by directors, active participation, and constructive challenges to management decisions in a productive manner. The board is supported by two key committees, Audit and Human Resource & Remuneration, which assist in addressing relevant matters and ensuring effective governance across the organization. These committees play an integral role in providing specialized oversight and guidance on their respective areas, thereby enhancing the overall decision-making process of the board.

Grant Thornton Anjum Rahman Chartered Accountants, a member of the 'A category' panel of the State Bank of Pakistan (SBP), was serves as the external auditor for Cherat Cement. The firm has issued an unqualified opinion on the Company's financial statements for FY25, confirming that the financial statements present a true and fair view of the Company's financial position and performance.

Cherat Cement maintains a well-defined organizational structure, with its operations segmented into eight core functional areas: Procurement, Production, Sales & Marketing, Information Technology, Finance, Legal & Corporate Affairs, Human Resources, and Internal Audit. Each function is headed by an Executive Director or General Manager (GM), who reports directly to the Chief Operating Officer and Chief Executive Officer. This streamlined hierarchy enables effective oversight, smooth coordination, and efficient decision-making across the Company.

Mr. Azam Faruque serves as the Chief Executive Officer of Cherat Cement. He holds a bachelor’s degree in Electrical Engineering and Computer Science from Princeton University, USA, and earned his MBA with distinction from the University of Chicago Booth School of Business. In addition to his extensive experience in the cement sector, he has served prominent positions on the Board of the State Bank of Pakistan, National Bank of Pakistan, and Oil and Gas Development Company Limited. His contributions also extend to the GIK Institute’s Board of Governors, the National Commission of Science & Technology, and the National Committee of the Aga Khan Foundation. Over the course of his career, Mr. Faruque has served on the Boards of the Privatization Commission, Madian Hydro Power Limited, Atlas Asset Management Limited, International Industries Limited, and Atlas Battery Limited, and has also chaired the KPK Oil & Gas Development Company Limited.

Supporting him on the executive team is Mr. Yasir Masood, the Chief Operating Officer, who is a Fellow Chartered Accountant (FCA), Certified Internal Auditor (CIA), and Certified Information Systems Auditor (CISA). He has been part of Cherat Cement since 2002. The Company’s financial functions are led by Mr. Ijaz Ahmed, a Fellow Cost and Management Accountant (FCMA), who has served as Chief Financial Officer since 2021. Mr. Asim Hamid Akhund, who joined in 2024, is the Company Secretary and Head of Legal and holds a Master of Laws (LLM). Collectively, the leadership team brings deep industry knowledge and specialized expertise, driving the Company’s strategic vision and operational excellence.

The management has carried out thorough assessments of both internal and external risks that the Company might face. Businesses face numerous uncertainties that might pose threats to its objectives if not addressed in a timely manner. Energy costs make up a major portion of the overall cost of production. Any variation in prices of coal and/or electricity tariffs poses a constant risk to the Company. The Company has installed Waste Heat Recovery plant to reduce its cost of power and has obtained a gas connection for the plant. Furthermore, the commissioning of 9MW of solar panels has been completed during this year. The strategic placement of plant in Nowshera, which is close to the Afghan border and the brand value of Cherat within Afghanistan has helped to retain the position as top exporter of cement to Afghanistan.

Cherat Cement is the first cement company that deploys SAP based ERP solution in Pakistan. The software enables the management to generate various regular and customized reports of different frequency (daily, weekly, monthly and yearly) pertaining to production, sales, cement prices and other important financial figures.

Cherat Cement is the first Company in the cement sector which implemented complete SAP solution in 2009. Through this, all business activities including finance, supply chain and inventory management are properly integrated. Users are properly trained on this system. The Company has successfully upgraded from SAP ECC 6.0 to S4/HANA cloud and also successfully implemented SAP Success Factor for certain modules of HR. Proper access and other controls are in place to ensure security of the system.

Pakistan’s cement industry is showing clear signs of recovery after a prolonged slowdown, supported by stabilization under the IMF program. Inflation has eased, the Rupee has remained largely stable, and interest rates have been maintained, although fiscal pressures and a widening trade deficit continue to constrain development spending. Despite these challenges, industry demand has strengthened, with overall dispatches rising notably in the first quarter. Domestic sales increased by 17% due to revived private construction activity, improved project execution, and gradually returning consumer confidence. Exports grew by 21%, driven by stronger sea-based shipments and higher dispatches to Afghanistan, though border tensions pose a risk. Five-month industry offtake rose 12% year-on-year, with domestic volumes up 15%, signaling improving construction momentum. Policy measures, including the Mera Ghar Mera Ashiana housing scheme and tax incentives, are supporting residential demand and may stimulate urban property markets. Export performance remains a crucial buffer, contributing approximately one-fifth of the sales mix. However, capacity utilization remains low at approximately 61%, reflecting the mismatch between installed capacity and combined domestic and export demand.. South-based producers continue to benefit from better export access, while North-based players face higher logistics costs. Looking ahead, FY26 volumes are expected to reach 51–52 million tons, indicating steady progress toward recovery. Continued private-sector construction, post-flood rehabilitation, and resilient exports are likely to support demand growth and gradually improve utilization levels. Overall, the sector is stabilizing and moving toward a more sustainable growth path.

Cherat Cement holds a strong position in the cement industry, with a notable market share of approximately 7%, primarily concentrated in the northern region. This market presence reflects the Company's significant influence in the sector, driven by its established brand and competitive capabilities within its core geographic area.

Cherat Cement registered a notable improvement in sales performance in 1QFY26, with total dispatches expanding by 19% year-on-year. This uplift was driven mainly by a 23% surge in domestic volumes, complemented by an 8% increase in exports. Even with persistent cost pressures and subdued construction activity in the public sector, the Company sustained its competitive position, benefitting from stronger operating efficiencies, an optimized energy mix, and disciplined cost management. On the revenue side, sales for the quarter grew 8.8% on an annualized basis. Operational gains were further reinforced by a sharp 39% reduction in finance costs, owing to consistent loan repayments and a decline in policy rates, alongside higher other income resulting from better liquidity and increased investment activity. Although the cost of sales rose by 13% in line with the increased production, savings achieved through additional solar power integration, substitution toward lower-cost grid electricity, and improved procurement practices mitigated the impact. Collectively, these factors contributed to a robust after-tax profit of PKR 2,095 million for the quarter ended September 30, 2025.

The Company’s margins showed significant strengthening in FY25, supported by improved operational efficiencies. Gross margins rose to 36.9%, up from 30.8% in FY24, while operating margins increased to 33.1% compared to 27.5% in the prior year. Net margins also improved substantially, reaching 23.0%, versus 14.3% in FY24. In 1QFY26, margins experienced a slight dip; however, they are expected to recover as cement demand gradually improves, driven by steady private-sector residential construction, a revival in commercial development, and post-flood rehabilitation activities that are likely to support additional growth.

Cherat Cement is strongly dedicated to sustainability, actively undertaking initiatives to safeguard the environment and uplift the community. Over time, the Company has invested heavily in renewable energy projects such as Waste Heat Recovery (WHR) systems, solar panel installations, water conservation system, and WHR applications on WDF engines. These efforts have helped lower the carbon footprint while simultaneously reducing production costs. Additionally, the Company has greatly increased its plantation activities at its manufacturing site and places a strong emphasis on wildlife preservation. As a responsible corporate citizen, Cherat Cement remains committed to the social progress of neighboring communities, focusing primarily on education, healthcare, access to safe drinking water, and the empowerment of women through various ongoing projects.

During 1QFY26, Cherat Cement’s working capital efficiency improved, with its net cash cycle reducing to 16 days, compared to 20 days in FY25 and 23 days in FY24. This improvement was primarily driven by a notable reduction in inventory days, which declined from 19 days in 1QFY25 to 14 days in 1QFY26, indicating faster inventory turnover and quicker cash conversion. Short-term borrowings (STBs), which had increased to PKR 2,730 million in FY25, moderated to PKR 2,094 million in 1QFY26, although still slightly higher than PKR 2,018 million in 1QFY25. The relatively stable trend in receivable days during 1QFY26 also reflects steady credit management practices, supporting overall working capital stability.

During FY25, Cherat Cement’s EBITDA rose to PKR 15,228 million, up from PKR 12,499 million in FY24, reflecting stronger operating profitability. In 1QFY26, EBITDA amounted to PKR 3,990 million, compared to PKR 4,154 million recorded in 1QFY25. Finance costs also showed a substantial improvement, declining by around 57% in FY25 to PKR 592 million, from PKR 1,381 million in FY24. The trend continued in 1QFY26, with finance costs falling further to PKR 95 million, largely due to lower reliance on borrowings. Effective cost control and reduced financial charges contributed to a marked enhancement in the Company’s debt service capability, with the debt service coverage ratio improving to 42.0x in 1QFY26, up from 27.3x in FY25 and 9.4x in FY24.

During FY25, the Company’s total debt increased to PKR 6,582 million, up from PKR 5,990 million in FY24. By 1QFY26, total debt had marginally declined to PKR 5,919 million, reflecting the Company’s continued adherence to its scheduled repayment plan. As a result, leverage has been consistently improving, standing at 14.3% at the end of September 2025, compared to 16.5% in FY25 and 18.9% in FY24. Looking ahead, the debt profile is expected to remain stable, supported by regular installments and the absence of any planned debt-financed expansion projects.