Tariq Saigol, Chairman, All Pakistan Cement Manufacturers Association (APCMA), has said that the cement sector stocks have witnessed a vibrant activity in country's stock markets during the quarter ended December 31, 2003.
"APCMA is pleased to report that growth in demand for cement has continued during the 2nd quarter of current fiscal, although the rate of growth declined in comparison with the first quarter of the year," Tariq said in a statement here on Friday.
This, he added, may possibly be due to impact of the winter season in the northern areas, lower demand in Afghanistan and somewhat slackening of development activity in the NWFP.
These factors notwithstanding, total dispatches of cement during the six months of the current year amounted to 6,290,027 tonnes including 490,377 tonnes exported to Afghanistan.
This represents total capacity utilisation during the half year of 75.10 percent which compares favourably with the corresponding period of the last financial year, when total dispatches amounted to 5,520,919 tonnes including 158,866 tonnes for export and capacity utilisation was recorded at 68.76 percent.
APCMA chief observed that continuous rise in demand now firmly establishes the fact that the economy is finally on a growth path, as borne out by increased spending on infrastructure projects and expanded requirement in the private sector, particularly for housing.
Construction, with its vast backward and forward linkages, must experience vibrant growth if the rate of GDP is to be accelerated and established in the 6 percent plus per annum bracket.
About the prices of cement, he said, these have remained stable with the best brands retailing at around Rs 220-225 per bag and certain brands selling as low as Rs 200 per bag.
An adverse development has been the huge and continuing increase in coal prices which at the international levels has reached US$ 56 per tonne and there appears no signs of this trend abating.
Unfortunately, he maintained, the local coal mining industry is yet to be developed on sound industrial and scientific lines and this is an area which government would be well advised to focus upon, so the foreign exchange expenditure on import of coal could be reduced.
Certainly, further reduction in cement prices is not possible at present, owing to the continuing high taxation on this item by levy of Excise Duty and Sales Tax and the recent rise in coal prices.
He said, "APCMA is encouraged by the measures the government is taking to address the issues hampering development in the housing industry and as mortgage financing becomes available at affordable rates of interest, we are confident that the cement sector will be able to utilise capacity to a greater extent."
He added that should the government reduce or abolish the Excise Duty in the next budget, it should be possible to further reduce the prices by passing on the benefit to the consumer.
He added that the industry's self-policing of dispatches from the cement units for sale in domestic and export markets has also led to an increase in government revenues.
It is a source of satisfaction for APCMA to report that despite reduction in rate of Excise Duty by 25 percent, government's tax collection from the sector registered an increase.