Tile makers see falling sales as housing slumps

Updated August 25, 2019

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Local manufacturers claim that Iranian tiles continue to enter local markets through illegal channels.
Local manufacturers claim that Iranian tiles continue to enter local markets through illegal channels.

KARACHI: As the housing and property market remains mired in a prolonged slump, affiliated industries say they are seeing a collapse in demand for the products as well.

Tiles and sanitary dealers are worried over a steep drop in sales and attribute much of it to budgetary measures; a leading tile maker says “there is unrest in the market with difficulty in understanding too many changes in the ways of doing business.”

Shabbir Tiles and Ceramics Limited Chief Executive Officer Masood Jaffery said many of his retailers, wholesalers and distributors are still unaware of the processes for registration of sales tax and income tax due to “very low literacy rate and limited availability of tax experts operating in the market.”

“Our sales have dropped approximately by 25 per cent during July to August” he tells Dawn, adding that this combined with large increase in gas tariffs, freight charges — due to axle-load restrictions on highways — overall rising inflation, has put immense pressure on ­profitability.

With low sales volumes, unutilised production capacity is also adding to the significant increase in costs, he added.

He said his company is facing resistance from the market for sales, but “we are trying to convince our retailers and wholesalers and distributors, by educating them about tax structure including the recent changes.”

Sessions are being conducted with business owners to brief them on the benefits of the sales tax registration.

The company is also explaining the processes to be followed to get registered as per the requirements of sales tax laws, Masood added.

“We are still lacking the direction on how to develop new strategy to resume standard sales business, in the instant tax transformation chaos happening in the overall market,” he remarked.

Offering a different sales scenario, All Pakistan Tiles and Sanitary Merchants Association Chairman Amin Lasani said sales are down by 60-70pc after the budget announcement due to low off-take of construction materials by the construction sector.

Mohammad Shahid, a partner in Tile Index said his sales are down 50pc only in the last two months because of poor activities in private sector and lack of pace in city and government ­projects.

He said the government had asked for registration of shopkeepers in sales tax but for the last two months little headway has been made towards this.

However, he said Iranian tiles continue to arrive unabated through illegal channels posing serious challenge to the local manufacturers.

Published in Dawn, August 25th, 2019