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The problems and challenges ahead in the cement industry were investigated and evaluated
Examining the sufferings and problems of the cement industry, which was discussed in the previous meeting of the Tehran Chamber of Industry and Mining Commission, was continued in the fifth meeting of this commission. In this meeting, the discussions revolved around the problems caused by the repayment of foreign exchange facilities of cement industry activists and the representatives of this industry wanted to take measures in the form of regulations in Articles 20 and 21 of the Law on Removing Obstacles to Competitive Production to facilitate the repayment of foreign currency debts of this industry.
At the beginning of this meeting and before the start of this discussion, Hossein Haqgo, an expert of this commission, reviewed some of the most important economic developments and, among other things, pointed to the announcement of the inflation rate for the 12 months ending in October of this year by the Statistics Center and said: The inflation rate statistics center 8.2% for the whole country, 8% for urban areas and 9.1% for rural areas, and the Central Bank has announced the inflation rate for the 12 months ending in October as 9.8%.
After announcing this news, Morteza Lotfi, Vice Chairman of the Industry and Mining Commission of Tehran Chamber, who chaired the meeting in the absence of Mehdi Pourqazi, said about the state of the cement industry these days: Since the beginning of the year, of the 85 million tons of cement capacity in the country Only 30 million tons of products have been sold, which is likely to reach 60 million tons by the end of the year. In this case, about 30% of the production capacity remains unused.
We are ready to hand over the cement production units to the government
Mohammad Atabek, a member of the Industry Commission and Chairman of the Board of Directors of the Cement Industry Employers Association, while presenting a history of the development process of the cement industry in the country, said: At the end of Mr. Ishaq Jahangiri's ministry in the Ministry of Heavy Industries, it was decided that the cement industry should develop. Because cement production had an advantage despite the presence of iron ore mines. In fact, the country's development plans were implemented slowly due to the lack of cement in the country, and for this reason, it was decided to increase cement production. At this point, cement production was estimated at 27 million tons. In 2004, it was decided that the price of cement should be determined every three months by the Article One Committee of the Cement Comprehensive Plan. But with the change of government, cement once again returned to the support basket.
Stating that the economic conditions have become such that cement producers are unable to repay the received foreign exchange facilities, Atabek said: With the approval and enforcement of the law on removing obstacles to production, conditions have been established to make these repayments possible.
This member of the Industry and Mining Commission of the Tehran Chamber pointed out that the regulations of Article 20 and 21 of the Law on Removing Production Obstacles have been changed several times, and continued: Recently, we raised our problems in a meeting with the Speaker of the Parliament, and Mr. Larijani ordered the formation of the Consolidation Commission. gave It has been decided to use a middle solution so that those who have converted the received facility into a production unit can pay their debt with better conditions. We hope that the government will prepare a realistic regulation to save the industry. But now, the source of the exchange rate has been considered for the repayment of the claims on the 4th of October 2013, in which case the exchange rate reaches about three thousand tomans.
Stating that only the producers should not pay for the sudden increase in the exchange rate, Atabek said: "If this situation happened beyond the will of the government, banks and the private sector, now each of these sectors should pay their share to get out of this situation." The summary of the discussions in the parliament committee was that the two industries of cement and spinning and weaving should repay their debts with the reference rate and the repayment rate of other industries should be 10% higher than the reference exchange rate.
In the final part of her speech, referring to the deep problems of the cement industry and the problems of the private sector, she said: We are ready to hand over our production units to the government.
In the meantime, Seyed Hossein Salimi, a member of this commission, said: I am worried about the repayment of the Uzances; Because those who have benefited from this method of financing, probably have to pay it at a rate of more than 3 thousand tomans, which once again encourages the formation of foreign currency debts.
Morteza Lotfi also said: Cement industry activists have increased production from 25 million tons to 80 million tons, and the government has promised cheap currency in exchange for the development of this industry. In such circumstances, it is necessary to facilitate its repayment terms.
Irreparable loss of delay in decision making
Mohammad Reza Fayaz, Deputy Minister of Industry, Mining and Trade and member of the Tehran Chamber of Industry and Mining Commission, also pointed out that during the currency shock a few years ago, the currency price tripled in a few days and the national economy weakened three times. Foreign currency debtors should be resolved as soon as possible, and prolonging the decision in this field creates irreparable disadvantage. Finally, a ceasefire must be declared.
The leader, who was present at the meeting from the Deputy Minister of Banking of the Ministry of Economy, said: The activists of the cement industry sell their products based on the currency of 3 thousand tomans, and they expect that an exchange rate will be taken into account in the reimbursement of the exchange rate. The government cannot reduce the exchange rate of repayment, because it will result in a heavy financial burden.
Mohammadreza Bahraman, another member of this commission, also said: Based on the strategy of development of the cement industry, the government at one point gave incentives to the producers, and in the following years, not only these incentives were withdrawn, which weakened this industry. I think that if a decision is made today to resolve this issue, its consequences will be far less than tomorrow.
Separation of weak and efficient cement units
In the continuation of this meeting, Atharinejad, from the Association of Management Consultants, presented statistics on the state of the cement industry and said: working capital is negative in 90% of cement units. The profit margin in cement companies is relatively good, but the gap between the net profit margin and the gross profit margin in these units is large.
He added: Our proposal is to ease the debt repayment conditions of those cement units that have the possibility to continue production. Because a number of cement units are not revived even under the condition of granting facilities and are very weak. These weak companies have also reduced the competitiveness of more efficient production units.
Bahadur Ahramian also pointed out that the issues related to the cement industry are observed in other industries as well, and said: It seems that the current situation of the cement industry is drawing the future of the steel industry. Let's assume that the government accepts that the cement units repay their debt with the currency of 900 Tomans. In the future, we will have debt-free production units that do not have a market. It seems that the main problem of this industry is overproduction.
Referring to China's experience in facing the issue of excess production, which took about 10% of its production units out of operation, she proposed the implementation of this solution in Iran.
Haqgoo also said that if the strategic plan of the Ministry of Industry, Mining and Trade is to be implemented, all industries will face the problem of overproduction in the future. He emphasized: The Ministry of Industry, Mines and Trade is the guardian of the industry and must act to solve the problem of the cement industry.
Alireza Kolahi also pointed out that unprofessional management prevails in most of the small units and suggested the merger of these production units with larger units.
But in the end, the representative of the banking deputy of the Ministry of Economy and Finance said: The government does not have the capacity to apply more discounts. We are willing to recover the debts at the opening day rate, but the financial burden must be met.
Compiled by: Amin Nanoconcrete Media