The fiscal year 2010-11, recently concluded, proved to be a nightmare for the cement sector as 80 percent of the cement manufacturers suffered huge losses on the back of stagnant local consumption and government failed to honour its commitment for payment of inland freight subsidy that could have boosted exports, says a press release issued by All Pakistan Cement Manufacturers Association (APCMA), here on Monday.
Cement consumption declined by 8.24 percent during the fiscal year 2010-11 as compared to the last year, which has rung alarm bells for the industry and planners of the country. Cement dispatches for FY 2010-11 reveal that capacity utilisation of the industry was at its lowest at 76.12 percent in past eight years with total dispatches declining by 6.68 percent to 21.97 million tons, down from 23.55 million tons in 2009-10. Low consumption of cement mirrors low growth of GDP of the economy.
A spokesman of the APCMA said that continuous losses to the cement industry are unbearable and might jeopardise the servicing of Rs 132 billion in loans the industry owes to the banking sector. Cement industry has been incurring massive losses due to high cost of production, declining exports and slack local demand of the commodity but the government ignored all the issues of cement makers and no support was extended to the ailing industry, he highlighted.
According to the data for FY2010-11, the cement industry remained particularly challenged and under pressure in the northern part of the country, while the few plants operating in the south were relatively better off. The 19 cement units in the northern region have cumulative production capacity of 36.17 million tons.
These units dispatched only 17.892 million tons of cement in FY2010-11, which was less than 50 percent of their installed capacity. In 2009-10 these units dispatched 11.22 percent more cement amounting to 20.154 million tons. The spokesman hoped that the government would encourage the construction of concrete roads and use of cement blocks instead of bricks which is the modern and internationally recognised method of construction.-PR
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