I am pleased to present to you the financial results of the Company for the year 2018/19. It has been a momentous year for the Company as it commissioned Cement Line III in January 2019. The commissioning was carried out by the dedicated and hardworking team before the scheduled time period and within the budgeted costs. Following this expansion, the production capacity of the Company now stands over 4.5 million tons per year.
The year 2018-2019 has been one of many political and economic developments. In an effort to stabilize the economy and improve macroeconomic indicators of the Country, the government had to take some difficult decisions. Cut backs in PSDP budget, increase in interest rates and devaluation of Pak rupee have had an adverse impact on the business industry including cement manufacturers. After years of consistently high growth, the cement industry grew by approximately 2% only in the year under review. Although domestic sales of the industry decreased by almost 2%, exports mainly by sea rose by approximately 37% In these tough times, Cherat Cement’s volumetric sales remained at almost the same level as last year. During the year, there was an increase in cost of production due to inflationary factors and rise in finance costs due to long term loans for expansion. The Company also had to reverse the tax benefit availed under section 65-B of the Income Tax Ordinance mainly in respect of Cement Line III due to its reduction from 10% to 5% from retrospective effect by the government.
The outlook for the cement industry remains challenging in the immediate term due to stabilization measures being taken by the government. However, things are expected to improve in the medium to long term as launch of construction work on dams and low-cost housing projects will drive the sales of the cement industry. Your company is ideally placed to take the advantage of such a situation following the expansion of its production capacity.
The year ahead is going to be one of challenges and opportunities. We believe our stakeholders provide us with the motivation to keep getting better and it is our endeavor to continue to deliver the quality.