The government’s announcement of a cut in excise duty on bulk cement by 2% will have a marginal impact on the overall dynamics of the cement industry, as bulk cement contributes not more than 8-10% of the total cement off-take.
At the same time, the prices of bag cement (50 kg bag) that had been increased by Rs 4-5 per bag in parts of the country early this month, will remain unchanged, say industry players.
Vinod Juneja, managing director of Binani Cement said, "We are yet to decide on the prices to be passed on to the bulk consumers, whereas prices of bag cement for retail consumers will remain intact." Bulk cement constitutes about 20% of the total cement off-take for Binani. The company had increased the prices of cement by Rs 4-5 per 50 kg bag in Maharashtra, citing an increase in demand.
After passing on the benefit of an excise cut in the second stimulus package, cement players reduced the prices of cement by Rs 4-6 per bag in December last year. Then, on the backdrop of good demand, players had increased the prices of the commodity in February 2009.
Cement dispatches from the past consecutive three months had also increased with 11% year-on-year in November 2008, 12% year-on-year growth in December 2008 and 8.26% year-on-year growth in January 2009.