The government seems bent on getting its way with cement makers. It has removed import duties, hoping to force cement firms to cut prices. How will this impact domestic manufacturers?
Ashish Guha, MD Of Mysore Cements feels that the duty cut will reduce imported cement prices by Rs 30 per bag. He further mentions that Mysore Cements is not looking at cutting prices right away. He expects coastal areas to see a dip in cement prices. According to Guha, the government move has more to do with cutting supply constraints.
Excerpts from CNBC-TV18’s exclusive interview with Ashish Guha:
Q: As a manufacturer, how have you read the cut in these duties and what might be the price gap now between domestic cement and landed cement?
A: If I were to just analyze what the spokesperson of Central Excise said, this move is to reduce supply constraint and obviously the Finance Minister is concerned about inflation, so it is good.
Secondly as far as the price is concerned, it will reduce imported cement bag by Rs 30. We did an analysis earlier, it was about Rs 255-260 per bag in Bombay. So the coastal areas will see a slight dip in prices.
Q: What is your sense - do you think these duty cuts will induce cement manufacturers to reduce prices?
A: It is a supply on demand situation. So I don’t think we are in any way looking at reducing prices right away. But the spokesperson of Central Excise has mentioned that she is ready to hear proposals from the industry on rationalization of duty structure in the domestic market - if that happens, obviously, there is a reason to reduce prices.
Q: Are the cement manufacturers looking to have any meeting with either the Commerce Minister or Finance Minister?
A: No idea. I don’t think so; nobody has any meeting so far. Nothing has been fixed.
Q: Given the rigidities of transporting cement, do you think what the government did yesterday was anywhere related to demand supply or was it trying to send the signal out to cement manufacturers to reduce prices?
A: It is more to address the issue of supply constraint. I don’t think it is in any way to push us to reduce prices. If you read the announcement, it is mentioned that these government proposals were rationalization of the dual duty structure.