Client Name

Lucky Cement Limited

Faculty Advisor

Mr. Vishal Khemani

SBS Thought Leadership Areas

Investment Decision Making

SBS Thought Leadership Area Justification

Our work at Lucky Cement falls in the Investment Decision Making thought leadership domain that looks into fact-based financial planning to improve operational efficiency and profitability. We also did an extensive cost analysis of the operations of Lucky Cement, and one area that we focused on the most was the evaluation of the current power mix and the possible alternative sources of energy like the renewables. Financial modeling helped us to determine cost implication of an involvement of changing power sources, thus working to help the company to make sound investment decisions to minimize cost of energy and enhance profitable margins. We also looked at pricing schemes of our competitors and local costs of transportation to find regional pricing benefits. This aided in providing the best pricing strategies that will facilitate premium pricing in some areas one of the most important areas of financial decision making in a competition market. Every insight and recommendation included quantitative support that enabled strategical investments and operations decisions in order to create long-term value.

Aligned SDGs

GOAL 7: Affordable and Clean Energy

Aligned SDGs Justification

Our project contributes to SDG 7 (Affordable and Clean Energy) since we check the current power mix and the possible switching to renewable energy to cut costs and decrease the dependence on non-renewable sources of power. This has a direct benefit of creating cleaner and more sustainable use of industrial energy.

NDA

No

Abstract

The objective of this experiential learning project (ELP) was to develop a detailed and strong financial model of Lucky Cement Limited, one of the major operators in cement industry in Pakistan. Our primary objective in the project consisted of the prediction of Lucky Cement financial statements in order to determine its operational efficiency and profitability in the long run. We conducted a rigorous study and analyzed the competition status of the company in the domestic markets and whether expansion of exports to the international markets was tenable or not. Some of the parameters that have been built in the financial model are the macroeconomic values like inflation, interest and exchange rates, GDP growth and spending on expenditure on PSDP. These are some of assumptions that it took to model future revenue streams of Lucky Cement. Our financial model followed a mixture of top-down and bottom-up approaches. We used various strategies, such as regression analysis and the Discounted Cash Flow (DCF) valuation model, to assess the company’s profitability. This report has a thorough competitive analysis of Lucky Cement to support our findings. It also highlights macroeconomic risks such as high interest rates, currency depreciation, and rising input costs, which might impact Lucky Cement’s profitability in the future, along with effective mechanisms to address those risks efficiently. Our analysis shows a strong link between Lucky Cements’ sales growth and the overall economic growth of the country. Despite record-high profitability with significant year-on-year growth in profit-after-tax, up by 2.7x at 13.5 billion, concerns such as economic stability and fluctuating coal prices remain a threat to the company. Based on our findings, our key recommendations would be to further expand into export markets and reduce dependence on domestic markets. Renewable energy should be adopted to reduce cost exposure and improve operational efficiency. Keywords: Financial Analysis, Financial Modeling, Valuation, Cement, Economy, Profitability, Exports, Operational efficiency, Cost

Document Type

Restricted Access

Document Name for Citation

Experiential Learning Project

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