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Cement

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BUSINESS STANDARD
Last Updated : Jan 28 2013 | 1:39 AM IST

The budget has been largely neutral for the cement sector. While on the one hand, it has driven up the potential demand for cement through the road and port projects, it has also saddled the sector with a higher excise duty. More importantly, however, the impact will be felt immediately as it shells out a higher excise while waiting for demand to pick up when the projects commence. Further, the excise hikes may not be passed on fully given the weak price scenario.

Wish List

Sops to infrastructure industries to drive cement consumption

Also Read

Reduction in import duty on coal from 30 per cent to 5 per cent

Reduction in excise duty from Rs 350 per tonne

Freight concession on cement exports

What they got

Increase in excise duty by Rs 50 per tonne or Rs 2.50 per bag

Infrastructure projects worth Rs 60,000 crore

Average reduction in rail freight by 3.7 per cent

Grasim

Increase in excise on cement to impact company.

Marginal impact on clinker as most companies have a combined clinker and cement unit.

Diesel surcharge of 50 paise per litre to have a slight impact on transportation costs as rail transport is minimal.

Firm realisations in other divisions to mitigate impact

Larsen & Toubro

Major thrust on infrastructure projects will benefit E&C as well as cement division.

Has one of the lowest margins among the top rung companies. May go down further if additional cost is absorbed.

Impact of excise hike will be significant since it has large capacity.

Higher transportation costs due to diesel surcharge is a negative.

VAT may impact cost structure of both divisions.

ACC

Increase in excise will impact as it has the largest cement manufacturing capacity.

Has the highest leverage to change in prices. May increase more if additional excise is absorbed.

Diesel surcharge of 50 paise per litre to impact transportation costs.

Low reliance on rail transport means less benefit of freight cost reduction.

Lowering of coal surcharge in railway budget will lower power costs.

Gujarat Ambuja

Excise hike to impact company the least since it has the lowest capacities.

Reliance on road network to impact freight costs due to increase in diesel prices and minimal benefit of the decline in average railway freight.

VAT may impact the cost structure and the bottomline in terms of the pricing of stock transfers.

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First Published: Mar 06 2003 | 12:00 AM IST

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