Budget Analysis - Cement Sector

CEMENT The excise duty on bulk cement put at Rs 400 a tonne or 14 per cent ad valorem, whichever is higher.

The measures

The finance minister pegged the excise duty on bulk cement at Rs 400 a tonne or 14 per cent ad valorem, whichever is higher. Simultaneously, he raised the excise on cement clinker to Rs 450 a tonne from Rs 350 a tonne.

The context Last year, the government had imposed a dual excise duty based on the retail prices of cement. If the retail price of a 50 kg bag was not above Rs 190, it attracted an excise duty of Rs 350 a tonne. If the price exceeded Rs 190, the levy was Rs 600 per bag. However, the government later put an ad valorem duty of 12 per cent on cement for a cement bag that exceeded Rs 190 to up to Rs 250 a bag. Industry players called it a confusing system.

The impact “More or less, there will be no impact on cement players. And there are no chances of any change in cement prices,” said H M Bangur, president of Cement Manufacturers’ Association and CMD of Shree Cement.

Since, bulk cement constitutes less than 5 per cent of the total cement sales, sector analysts said the increase in excise on bulk will be marginal and that too for institutional buyers. Market experts said companies might pass on the increased costs to bulk consumers and the rise could be around Rs 200 a tonne.