J Datta Gupta, chief commercial officer, ACC, confirmed that the company has reduced prices by Rs 5 a 50-kg bag. Similarly, in a statement, Ambuja Cements, said, "The Company has decided to pass on the benefit of excise duty reduction to the end-user and hopes that lowered prices will help stabilise the demand over the coming months. The price of cement is expected to go down by Rs 4 to Rs 6 per bag from today."
Together, the two companies have a capacity of 41 million tonnes (MT), one-fifth of the total domestic market. They have plans to add another 15 MT of fresh capacities by 2010.
In Mumbai, the wholesale rate was quoted at Rs 258 for a 50-kg bag, which is now expected to dip further to Rs 252. Similarly, in the North, the wholesale rate at the dealers level is expected to come down to Rs 225, in the East to Rs 215-220, and in the Central part to Rs 205-210 a 50-kg bag.
A week ago, companies including ACC, Ambuja and Ultratech had cut the bulk cement prices by Rs 2-4 a bag in Mumbai. The bulk cement constitutes 60 per cent of the overall cement sales in Mumbai and its adjoining area.
The city-based dealers said companies including ACC, Ultratech and Ambuja Cements, have cut the prices over the last one week. The bulk cement is now available in the range of Rs 248-252 a bag against Rs 252-255 a bag earlier.
"This was bound to happen as demand from the builders was on the decline," said Madhusudan Shah, a Mumbai-based cement dealer. The city consumes around 6,50,000 tonnes of cement every month, out of which close to 4,00,000 tonnes go to the bulk buyers.
Since, there is an across the board reduction in excise duty, analysts said that this should translate into a reduction of Rs 10 a bag.
"But it remains doubtful. Companies may not cut the rates to that extent. A cut of Rs 5-6 seems to be on the card in the next few days across the country," said an analyst at a domestic brokerage firm who did not wish to be named.
During April-October this year, the cement production growth rate declined to 6.3 per cent against last year’s 8.2 per cent. Similarly, the despatches (including exports) during the same period grew only by 6.27 per cent against 8.23 per cent last year.