Cement sector witnesses healthy growth in domestic market


KARACHI: The calendar year 2014 ended for the cement sector on a healthy and pleasant note as besides registering sustained growth in last six months, the sector was exonerated of any willful default by a report presented to FBR by LUMS.

Despatches during the six months ended on 31st Dec., 2014 increased by 6.23 percent to 17.12 million tons compared with despatches of 16.11 million tons during the corresponding period of 2013. “The most pleasant aspect of this growth is that it is led by domestic consumption which increased by 9.10 percent during July to Dec 2014” said a spokesman of All Pakistan Cement Manufacturers Association. He said that higher cement uptake depicts turnaround in economy. It may be noted that during the first 6 months of this fiscal, cement despatches crossed the 3 million tons bench mark in three months in 2014. During July-December 2013 this benchmark was not crossed in any of the six months.

Further analysis of despatches revealed that the factories located in north showed robust growth in domestic consumption by selling 10.96 million tons in domestic markets from July to Dec 2014 against 9.9 million tons  during same period of last year thereby registering growth of 10.50 percent. The South based factories witnessed nominal growth of 2.39 percent in domestic dispatches supplying 2.10 million tons of cement to local markets from July to Dec 2014 against 2.05 million tons  during same period of last year. In exports however the North based mills registered decline of 9.65 percent as exports were restricted to 2.54 million tons in first six months of this fiscal compared to 2.8 million tons during same period last fiscal. The South based factories however were able to increase cement exports by 13.92 percent to 1.51 million tons from July to Dec 2014 against 1.33 million tons  during same period of last year.

The industry despatched 3.11 million tons of cement in December 2014 compared with 2.94 million tons despatched in December 2013 showing growth of 5.71%. The local despatches were 2.5 million tons during December 2014 against 2.3 million tons during December 2013 depicting increase of 7.91%. The exports despatches showed decline by 2.45% as against 625,000 tons exports during December 2013, the industry exported 610,000 tons during December 2014.

Meanwhile a  delegation of APCMA attended the presentation on cement sector given by LUMS official at FBR House, Islamabad on December 23, 2014 regarding their allegation that cement sector is involved in sales tax and income tax evasion.

The delegation was informed by the LUMS representative that report published in a section of press has been changed and the final report has been based on the last three years annual accounts of the companies up to June 2013. The delegation noted that with the change in source data, the report has become more reliable and representative as compared to earlier report leaked in the press.

The FBR also admitted that they would rely on the final report and recommendation instead of any previous draft. Both FBR and APCMA are on the same lines in respect of improvement in tax collection and there is no tax evasion in the sector. The FBR also confirmed that they will take cement sector in confidence in order to improve the tax collection processes.

Spokesman of APCMA further lauded the co-operation extended by FBR for resolving the MRP issue faced by cement manufacturers since a long time. During the meeting with FBR in first week of December 2014, Chairman FBR agreed to make two zones in the country for fixation of MRP – north zone and south zone. The industry welcomed this decision and SRO to that effect has also been issued in second week of December 2014.

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