Rediff.com« Back to articlePrint this article

Improved demand to help cement sector

February 27, 2010 15:53 IST
Hike in excise duty on cement products is negative, but can be overwhelmed by improved demand from greater thrust on infrastructure and rural sector.

Budget Provisions

Duty Structure

The excise duty on cement products, with fly ash content of atleast 25% by weight was 8% hitherto, which has been increased to 10% in Union Budget 2010-11.  There has been corresponding increase in the excise duty on cement (which is a key input) as follows:

Mini cement plant: Cement

Present rate

Proposed rate

1.

2.

Cleared in packaged form: -

(i) of retail sale price not exceeding Rs. 190 per 50 kg bag or of per tonne equivalent retail sale price not exceeding Rs. 3800;

(ii) of retail sale price exceeding Rs. 190 per 50 kg bag or of per tonne equivalent retail sale price exceeding Rs. 3800;

Cleared other than in packaged form

Rs.145 per tonne

Rs. 250 per tonne

 

Rs. 170 per tonne

Rs 185 per tonne

Rs.315 per tonne

Rs.215 per tonne

Other than mini cement plant: Cement

Present rate

Proposed rate

1.

2.

Cleared in packaged form,-

(i) of retail sale price not exceeding Rs. 190 per 50 kg bag or of per tonne equivalent retail sale price not exceeding Rs. 3800;

(ii) of retail sale price exceeding Rs. 190 per 50 kg bag of per tonne equivalent retail sale price exceeding Rs. 3800

Cleared other than in packaged form

Rs. 230 per tonne

8% of retail sale price

8% or Rs. 230 per tonne, whichever is higher

Rs.290 per tonne

10% of retail sale price

10% or Rs.290 per tonne whichever is higher

                                       Cement clinker

Rs.300 per tonne

Rs. 375 per tonne

Industry Expectation

The industry was expecting rise in excise duty and implementation of GST.

Budget Impact

Rise in rural development and spending will help the cement products manufacturer see the demand increasing in coming days.

Stock to watch

Hyderabad Industries, Everest Industries, Visaka Industries, Ramco Industries.

Outlook

The cement product industry especially the asbestos cement manufacturers cheer on the impetus given to rural infrastructure – especially on the thrust given on rural housing by the government, which is a positive sign. The government focuses on the rural and infrastructure growth is big boost for this industry.

Acceleration in urban housing and construction and other infrastructure related activity will revive the demand for the various cement products, which is experiencing excellent demand from the rural markets. However, overall, the budget looks neutral for the industry.

Powered by capitalmarket