Cement Manufacturers Are Ruing The Decision to Increase Capacity

Cement manufacturers are ruing the decision to increase capacity, as the cement consumption remained stagnant in past four years. The exports are also on constant decline forcing the sector to operate at 69 percent installed capacity. A spokesman of All Pakistan Cement Manufacturers Association (APCMA) said it was not possible for the industry to service its high cost loans carrying high interest rates by operating at low capacities. This is the reason the non performing loans of this capital intensive industry have exceeded 22 percent and are still rising, he said. During the first eight months of this fiscal year the industry despatched 20.5 million tonnes of cement recording a nominal rise of 3.48 percent against the despatches of 19.74 million tonne during the same period last year, he added. The capacities were increased when the economy was booming and most of the capacities were increased in the northern part of the country where Afghanistan was the only export market but its potential was limited. The exports to India were limited at that time and today as well due to many non- tariff barriers erected by India. He regretted the growth during past four years was much below the expectation and the government also failed to provide funds for vitally essential infrastructure. The fierce competition between the mills sitting on huge capacities kept the rates of the commodity much below the average inflation in the country, he informed. He said rates of inputs of the industry increased in line with the inflation and rupee devaluation while the cement prices increased merely by 6 percent from the average cement rates in 2006. The spokesman said exports provided some relief to the industry in past few years have declined at a rapid pace during the past eight months of this fiscal (July 2011 to February 2012). He said during this period the decline in export was 5.57 percent to 5.62 million from 5.95 million during the corresponding period last year. He said exports to India, mostly through train increased by 39.48 percent. Source: uaecement.com