India: cement players have posted mixed performance for February 2010: Sharekhan

India: cement players have posted mixed performance for February 2010: Sharekhan
Published: 04 March 2010

The cumulative volume growth of these four leading domestic cement players for the month came in at 4.3 per cent YoY to 6.6Mt. 

Brokerage house Sharekhan is of the view that top four domestic cement players (ACC, Ambuja Cement, Grasim Industries and UltraTech Cement) have posted a mixed performance for February 2010.
"In the Union Budget 2010-11 there were a couple of announcements that have increased the input cost for the domestic cement industry. The key changes are as follows:
(a) excise duty increased from 8 to 10 per cent for packaged cement having a maximum retail price above INR190 per bag and excise duty per tonne of clinker increased from INR300 to INR375
(b) cess duty of INR50/t imposed on domestic as well as imported coal
(c) diesel price increased by INR2.55 /l
(d) exemption on the service tax on rail freight withdrawn, "the brokerage house notes in its report.

"In response to these announcements that increased the overall cost of cement makers and pressurised their margins, the cement players have increased the price of cement in most regions by iNR10 per bag with effect from March 1, 2010," it adds.

"The cement prices have increased by INR10 per bag as against the average increase of INR7.6 in the cost of per bag. This has benefited the domestic cement companies by INR2.4 per bag. The fact that the increase in the price is higher than even the cost effect (INR7.6) points to the strength in the industry due the strong volume offtake," it further notes.