Cement firms may not pass on the benefits

Cement firms may not pass on the benefits
Published: 27 February 2007

The rail Budget’s new mission target of transporting 200Mt of cement and steel by 2011-12 has been unanimously welcomed by the cement industry.

Cement capacity is expected to cross 250Mt by 2011-12. Currently, 35 to 40% of cement is transported on rails. The government is now planning to take it up to 80% by targeting 200Mt. This will be done essentially by adding more wagons. Analysts say this will help cement players cut freight costs in the long-run - the cost of using roads is substantially higher. But many are disappointed that no cut in freight on cement products has been announced. Any decrease in freight would have impacted the sector positively because nearly 40% of the total produce is transferred on rails and, therefore, any reduction will directly mean lower costs.