Belt-tightening in public spending and austerity in development expenditure in Bangladesh have hit the cement sector hard with a waning demand since 2021.
The opening of letters of credit (L/Cs) for import of clinkers and other raw materials for the key construction material has declined significantly, according to industry insiders.
They said the cement industry has been facing a death blow due to costly dollar and energy crunch too.
National Board of Revenue (NBR) data show nine large cement companies paid 8.22-per cent less value-added tax (VAT) in fiscal year (FY) 2021-22 than previous year's.
Shah Cement Industry Ltd's VAT payment declined by 6.62 per cent compared to that of the previous year, reveals the NBR's large taxpayers unit (LTU) statistics.
Siam City Cement (Bangladesh) Ltd also paid nearly 24 per cent less VAT last year.
Seven Circle Bangladesh Ltd's payment declined by 7.53 per cent last year compared to that of previous year.
Heidelberg Cement Bangladesh Ltd paid 19.81 per cent less consumption tax in FY22.
Premier Cement's VAT payment fell by 9.45 per cent last year followed by Unique Cement Industries Ltd 15.81 per cent and Madina Cement Industries 17.50 per cent.
Of the nine companies under the LTU, Akij Cement Company Ltd's VAT payment grew slightly by 0.63 per cent and MI Cement Ltd 23.72 per cent.
Except a few, according to the business insiders, a majority of the large companies has faced the blow of an economic downturn.
The LTU-VAT unit received Tk 346.2 million less VAT last year from the companies in question under its jurisdiction than the previous year's collection.
The LTU received Tk 3.86-billion consumption tax in FY22, followed by Tk 4.20 billion in FY21, Tk 3.73 billion in FY20, Tk 3.32 billion in FY19 and Tk 3.09 billion in FY18.
Masud Khan, chief adviser of Crown Cement, said the demand for cement has gone down due to a reduction in public as well as development spending.
Per-capita cement consumption in Bangladesh is an estimated 230 kilogram, one of the lowest in the world, he added.
The global average of per-capita cement consumption is 563 kg, according to an EBL Securities Report.
Web searches show per-capita consumption is 1,700 kg in China, 1,250 kg in South Korea, 800 kg in Malaysia, 500 kg in Thailand, 270 kg in Myanmar and 312 kg in India.
Mr Khan, however, said clinker prices have decreased to $50 per tonne from earlier $70 as freight charges have halved in recent times.
Home cement makers have to import five types of raw materials.
Cement production cannot be continued if demand drops as it has a lifespan of two to three months, according to Mr Khan.
The shelf life of cement is three months. When cement comes into contact with moisture, it undergoes a process called hydration.
Mr Khan said large companies manage to continue import by opening L/Cs, but small ones are facing difficulty due to costly dollar.
Crown, Premier and Seven Rings have performed well in the first quarter of the current fiscal, he cited revealing a provisional data.
Mohammed Amirul Haque, founding managing director and chief executive officer (CEO) of Premier Cement, said gas-power shortages and costly dollar have affected production of cement companies.
"I have never enjoyed an uninterrupted power supply in my cement factory," he added.
According to Mr Haque, frequent power outage has been affecting performance of the high-end capital machinery of cement companies.
© 2024 - All Rights with The Financial Express
