KARACHI, April 24: The All Pakistan Cement Manufacturers’ Association (Apcma) has justified the increase in price of cement, complaining of even faster increase in cost of production.

Though many sector analysts would argue against the Apcma reasoning, the point of view of the cement manufacturers was conveyed through a press release issued on Tuesday.

Apcam Chairman Aizaz Shaikh stated that the ex-factory prices of cement per bag had not increased in proportion to other construction industry inputs in the last 10 years.

He contended that in 2010-2011, 11 cement units suffered loss before taxation aggregating to Rs5.681bn while seven cement units, of which two are located near Karachi in close proximity to the seaport, earned profit of Rs5.982bn.

At the end of 2010-11, the cement industry debts to financial institutions had risen to Rs125.3 billion.

According to data compiled by Apcma, the price of bricks had gone up by Rs2,800 per 1,000 in six months of the current fiscal year, while it increased only by Rs2,400 in the last decade (2000 to 2010).

“The current price of 1,000 bricks is Rs7,000 which was Rs4,200 in the year 2010-11, while the price of the same number of bricks was Rs1,800 in the year 2000 and reached Rs4,200 by the year 2010,” Aizaz Shaikh said.

Steel prices had also increased by Rs6,000 per ton in four years since 2007-08 and prices witnessed increase of Rs30,000 in just one year from Rs40,000 per ton to Rs70,000 per ton from 2006-07 to 2007-08. Prior to this massive rise, steel prices increased on average by Rs3,000 in the seven year period from 2000 to 2006, he added.

He said that in addition to the above, provincial tax on mining was imposed at the rate of Rs33 per ton for last three years, was Rs18 in 2008-09. This almost doubled in one year. In the year 2000 it was Rs12 per ton and reached to Rs18 with the increase of Rs6 in the nine years from 2000 to 2008-09. There was an increase of Rs15 in just one year in 2009-10.

According to Apcma, increase in packing prices had witnessed increase of Rs7.54 per bag in the last 4.6 years, while it had risen by only Rs3.11 in eight years from 2000-01 to 2007-08. “Currently one bag costs Rs20.65, while the price of one bag was Rs13.11 in the year 2007-08 and it was only Rs10 in the year 2000-01. This means the price of a packing bag doubled in 10 years,” the Apcma chief argued.

Besides all this, the devaluation of Pakistani rupee against dollar had dented cement sector profitability as well.

The ex-factory price of a cement bag was Rs179 in the year 2000-01 and now it stood at Rs370 at the close of financial year. The compounded annual growth rate of cement prices was 6.28 per cent in the last 10 years, which was well below the inflation rate, the Apcma chairman argued.