APCMA shares mixed figures for 4MFY19

All Pakistan Cement Manufacturers Association (APCMA) while reviewing dispatches, profit and progress of cement industry between July and October 2018 shared mixed figures. APCMA's spokesman said that cement industry's profitability has declined considerably due to an increase in input costs, while the construction sector is not posting the anticipated demand.

According to APCMA, local dispatches during first four months of this fiscal July-October 2018 shrank by four per cent to 10.244Mt from 10.671Mt in July-October 2017, while the exports posted a decrease of 21.5 per cent, falling from 1.287Mt to 1.01Mt during same period this year.

However, in October 2018 alone, cement dispatches grew by 7.5 per cent. The industry dispatched 4.536Mt of cement last month, out of which almost 3.921Mt was consumed domestically and 0.615Mt was exported. Exports grew by impressive 38.9 per cent while the domestic consumption registered an increase of 3.8 per cent.

APCMA claims that profit after taxation of cement manufacturers has declined by 42 per cent in first quarter of this fiscal as compared to same period last year. Its reasoning is that exports became competitive only because of a steep decline in the rupee value, as the dollar increased from around PKR124 (US$0.93) at the start of this fiscal to PKR133 (US$0.99) on 1 November, an increase of 7.3 per cent in just four months. However, this decline in Pakistani currency increased the input cost of most of the fuels (imported coal) and spare parts consumed by the industry.

A spokesman of association pointed out that Pakistan's cement industry is heavily taxed. During the financial year 2018-19, federal excise duty has further been increased by PKR250/t. Federal excise duty was PKR400/t (PKR20/bag) in the financial year 2013-14 which has increased to PKR1500/t (PKR75/bag) in the budget for 2018-19.

Cement dispatches are also subjected to a general sales tax at 17 per cent on the maximum retail price of PKR86/bag. Other taxes include income tax at 31 per cent, workers profit participation fund at five per cent, workers welfare fund at two per cent and provincial levies ie, royalty and excise duty. The total taxes on a bag of cement works out to PKR185/bag, which is 31 per cent of PKR600/bag.

APCMA has appealed to the government to cut duties and taxes on cement to improve its local demand and help the manufacturers to explore foreign markets to earn much-needed foreign exchange and contribute more to the national economy.