Home Business Cement industry asks for Tax cuts as Fauji cement finalizes new plant

Cement industry asks for Tax cuts as Fauji cement finalizes new plant

Fauji cement
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The cement manufacturers have urged the government to support the industry by reducing taxes and placing an anti-dumping duty on Iranian cement to make it more affordable for consumers. Meanwhile, Fauji Cement has been given the go-ahead to set up a new plant. In this way, the product’s demand will be increased, resulting in capacity enhancement of the industry besides generating job opportunities.

The industry stakeholders said that Pakistan has the most efficient cement industry that has made inroads even into the Indian market despite tariff and non-tariff trade barriers. If the government is interested in reducing the cement rates then it should reduce the levies on domestic production, they proposed.

The improvement in profitability is mainly attributable to Line 2 being under rehabilitation last year and the company was also purchasing clinker from outside at that time, which affected margins.

According to the data of the All Pakistan Cement Manufacturers’ Association, the domestic sales fell 8.80 percent in the north zone and 10.91 percent in the south zone while exports from the north also declined 29.66 percent. Industry experts said this abrupt decline in domestic cement uptake has taken the cement manufacturers by surprise, expressing hope that this was a one-off decline and the growth would gather pace in coming months.

The industry was rightly worried because they have made huge investments to increase capacity that has now crossed 50 million tons a year. This expansion was made on the assumption that construction activities would continue to grow at a rapid pace in the long-term. In July 2018, the overall growth in the industry was 5.1 percent, while in August 2018 the overall growth was negative 8 percent.

Read more: Pakistan to Host International Cement Industry Conference

Industry stakeholders pointed out the need for cutting down duties and taxes to bring down the prices and facilitate consumers. They opined that this would also help the industry to grow as it was playing a vital role in the development of the country.

The cement manufacturers have urged the government to support the industry by reducing taxes and placing an anti-dumping duty on Iranian cement to make it more affordable for consumers.

At the 10th Extraordinary General Meeting of Fauji Cement Co (FCCL)’s Board of Directors, held on 29 November, the company secretary was authorised and empowered for the execution of a new cement plant in Pakistan. FCCL also elected executive, non-executive and independent directors for a term of three years commencing from 13 December 2018 to 12 December 2021.

FCCL is trying to capitalize on its profit streak as it strives to enter the new year. During the first quarter of FY18-19, FCCL earned a net profit of PKR 801m (US$5.97m) as compared to PKR 444m in the same period of the last year. Sales revenue stood at PKR 5342m, compared to PKR4794m in the corresponding period of last year showing growth of 11 percent.

Read more: Exceptional growth makes Pakistan’s cement industry eye increased export

Cost of sales decreased by 11 percent and the company has earned a gross profit of 27 percent as compared to 17 percent of the corresponding period of last year.  The improvement in profitability is mainly attributable to Line 2 being under rehabilitation last year and the company was also purchasing clinker from outside at that time, which affected margins. In the current accounting period, Line 2 was has been running at optimum capacity.

FCCL’s plant is located at Fatehjang in Punjab. The clinker capacity stands 3.27Mta and 3.433Mta of cement, respectively.


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