Union Budget 2012 -13 : Cement prices to go up by Rs. 8


Indian cement manufacturing companies on Friday said the excise duty hike of about 2% will result in price increase of nearly Rs. 7 to Rs. 8 per 50 kg bag. Most companies will look at passing the hike to consumers since this is the peak season for the industry.

The real estate industry has been taxed heavily, not only on account of the change in excise duty, but also due to the change in the basis of charging excise duty on retail selling price (RSP) in place of transaction value. Despite the abatement of 30% given on RSP, the net impact is considerable. Same time the Central  government’s focus on the infrastructure sector would boost demand.

Indian Cement companies recently increased prices by about Rs.10 to Rs. 15 per bag Pan India after the increase in freight rates by the railways.

On an average, a 50 kg cement bag costs about Rs. 270 to Rs. 280 pan India. The freight was increased a few days before the rail budget both on outgoing (cement) and incoming (coal) materials due to which cost of cement increased by Rs. 25 to Rs.3 0 a bag.

Overall, there will be an increase of  Rs. 7 to Rs. 8 per bag of 50 kg and we will pass it on to the consumers. Cement companies are still calculating the exact quantum of price increase. Whatever the increase is, it would like to pass it to consumers.

However, the removal of 5% import duty on coal will help cement companies. However, the increase in excise duty, especially coming after the recent substantial hike in rail freight, would result in considerable increase in the cost of delivered cement. .
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