Cement manufacturer ACC is shutting down one of its Kilns at Gagal (HP) due to poor cement demand in both Himachal Pradesh (HP) and Punjab on account of economic slowdown.
Himachal Pradesh and Punjab are showing negative demand of approximately 8% as compared to last year and has resulted in increase of clinker stocks at Gagal works in HP, necessitating a shutdown of manufacturing operations for balancing the clinker stocks.
The poor demand scenario coupled with duty free and CENVAT (CVD) free imports has resulted in the clinker stock at Gagal plant of ACC increasing from August onwards to reach a high level in December, forcing the company to shut one of it`s kilns from Dec. 16, 2008, for 15 days.
The company is keenly watching the impact on cement demand due to the recent positive initiatives taken by the government to improve liquidity and catalyze construction activities.
The company also hopes and expects the government to take further steps for stimulating internal demand of cement. Some of the steps the company expects are imposition of CVD and SAD on imported cement from Pakistan, to provide a basic level playing field.
The government could also consider rationalizing the cement excise duty structure, as well as providing abatement of at least 40% as is the case with many other commodities. While the recent reduction in excise duty rate is very much welcome, the company expects it to be also extended to clinker as a matter of equity.