PACRA Maintains the Entity Ratings of Fecto Cement Limited

Fecto Cement Limited has maintained a presence in Pakistan’s cement industry for over three decades, reflecting the sponsors’ long-term commitment to the Company’s sustainability and operational continuity. Operating through a single manufacturing facility, FCL is classified among the smaller industry participants, accounting for approximately 1.6% of total dispatches in FY25. During FY25, the cement sector remained under pressure amid constrained public sector development spending and subdued construction activity. However, industry dynamics showed signs of stabilization toward the close of the fiscal year. Total cement sales increased marginally by 2.1% to 46.2 million tons, primarily supported by a 30% surge in exports to 2.1 million tons, while domestic dispatches recorded a decline. Overall capacity utilization remained relatively stable at around 61%. Early indicators for FY26 suggest a gradual recovery in demand. Industry dispatches during 1QFY26 posted growth, driven by a 15.8% increase in domestic sales and a 20.8% rise in exports, signaling improving market momentum. During FY2025, unlike the broader industry trend, the Company reported total volumetric sales of approximately 0.713 million MT in FY25 (FY24: ~0.725 million MT), comprising both domestic and export dispatches. Despite the marginal decline in volumes, net revenues increased to PKR 11,096 million (FY24: PKR 10,908 million), reflecting improved pricing dynamics. The 1.57% reduction in total volumes was primarily attributable to subdued domestic demand. During 1QFY26, the Company achieved a remarkable 97% capacity utilization rate, reflecting Management’s strategic commitment to operational efficiency. This high utilization resulted in a significant 42.92% increase in total dispatches, primarily underpinned by a 48.21% surge in domestic sales. This robust local growth—which more than offset a 63.02% decline in export volumes—indicates a substantial recovery in local demand, bolstered by improving macroeconomic conditions and a concentrated rise in national infrastructure development projects. The Company’s gross profit margin declined to 18.76% in 1QFY26 from 23.78% in the same period last year. Net profitability also moderated, with net profit declining to PKR 208 million in 1QFY26 from PKR 228 million in 1QFY25, largely due to lower average selling prices and higher levies and taxation. Notwithstanding this quarterly decline, overall margins improved in FY25 on a year-on-year basis, supported by a significant 37.65% reduction in finance costs. The Company maintains a moderately leveraged capital structure, with a leverage ratio of 15.1% as of end-September 2025. Equity currently stands at PKR 4,757 million, and the leverage profile is expected to improve further going forward. It is pertinent to note that the Company’s operations experienced a temporary suspension during 2QFY26 arising from administrative and procedural matters with local authorities. This matter was successfully resolved through the legal system; the Honorable Islamabad High Court subsequently declared the suspension unlawful, facilitating a full resumption of plant operations. Furthermore, the Company announces a transition in its governance leadership: following the resignation of Mr. Aamir Ghani, the Board has appointed Mr. Jamil Ahmed Khan as the new Chairman.
The assigned ratings reflect the Company’s manufacturing capacity, its relative standing within the industry, and the recent recovery in capacity utilization and sales volumes. The sustainability of the ratings remains contingent upon management’s ability to sustain operational continuity, manage cost pressures, and retain its market position amid intense competition and a changing operating environment. Any material activity impacting the production would be a key factors considering the rating in future.

About the Entity
Fecto Cement Limited is a public limited company incorporated on February 28th, 1981. The Company is principally engaged in the manufacturing and sale of Ordinary Portland Cement (OPC). Its production facility is located in Sangjani Village, Islamabad, with an annual installed capacity of approximately 1.0 million metric tons of cement. Mr. Yasin Fecto, the Chief Executive Officer, has been associated with the Company for over three decades and holds a 75% equity stake.