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Gains Ahead For Gujarat Ambuja

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Like most cement companies, the Rs 921 crore Gujarat Ambuja will benefit from the boost given to the housing and infrastructure sectors in the budget. While power costs will increase marginally, there will also be nominal gains on account of fly ash being exempted from excise duty, said cement analysts.

On the BSE, the scrip closed at Rs 304 after touching a high of Rs 329.75. It had opened at Rs 310.

"The budget increases the deduction for the purpose of computing income from house property for repairs and renovation from one-fifth to one-fourth. Besides, interest on borrowed capital for construction of houses for self-occupied property has been increased from Rs 15,000 to Rs 30,000. Besides, the government has also announced plans to build 20 lakh houses this year. All these measures will boost sales of Gujarat Ambuja as it is a major player in the retail segment," said a cement analyst.

 

The eight per cent hike in customs duty will jack up Gujarat Ambuja's power costs, said cement analysts. It is one of the most efficient domestic manufacturers, and has been using imported coal for higher calorie output. " Considering that total imports during 1996-97 were Rs 66.5 crore, the impact of the customs duty hike will be close to Rs six crore which is not much," said an analyst. "

Besides, Gujarat Ambuja is a net export earner, and the impact of the cost hike should be nullified," he added. Gujarat Ambuja spent Rs 116 crore on coal and other fuels during 1996-97.

Marginal benefits will accrue to the company from exemption of flyash from excise duty. Gujarat Ambuja uses flyash as an input at its grinding unit at Ropar in Punjab. Besides, ready mixed concrete (RMC) has been exempted from excise, and this will benefit cement companies that are manufacturing it, said industry sources. There was an eight per cent excise duty on RMC.

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First Published: Jun 02 1998 | 12:00 AM IST

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