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Budget expected to benefit cement sector

Rumi Dutta

The agricultural, infrastructural and road development initiatives announced in Wednesday's Budget proposals are expected to significantly push up cement demand.

"The budget is expected to have a positive impact on the entire economy as well as on the cement industry," D D Rathi, president and chief finance officer of Grasim Industries, said. "We will gain heavily on the ground now that dividend distribution tax has been lowered to 10 per cent," he added.

Echoing the same sentiments, Anil Singhvi, executive director of Gujarat Ambuja, pointed out, "The emphasis on agriculture and road development programme will give the cement sector a boost."

Though the customs duty on cement has been reduced from 35 per cent to 25 per cent and the 10 per cent surcharge has been discontinued, cement firms do not see any major adverse impact as a result.

The Rs 350 per tonne countervailing duty still holds. This eventually makes the customs duty on cement stand at 45 per cent compared with the pre-budget levels of 65 per cent.

Sinha also did not touch the excise duty on cement, which is Rs 350 per tonne. It has remained the same for the past two Budgets.

"The retail landed cost of cement will be around Rs 208 per 50 kg bag. This will be still higher than the Rs 185 a bag rate in Bombay and around Rs 160 in the rest of the country," Rathi said

"The domestic cement industry has built up a sector that is globally competitive in technology, quality and cost of production. The ex-factory cement prices in India are among the lowest in the world. It is commercially unviable for any Asian supplier to compete on price in the Indian markets unless they resort to dumping. Any such action would attract anti-dumping measures, as prescribed by the WTO," said A K Jain, president (marketing), ACC.

According to analysts, the cut in import duty will have no significant impact on the cement industry considering the fact that imports largely depend on the infrastructural bottlenecks of the ports.

"The change in import duty will have no significant impact on us and on the domestic prices," a senior Larsen & Toubro official said.

The finance minister declared full excise relief for cement sold in earthquake-hit Gujarat up to July 31.

Source: Business Standard

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