Indian mini-budget

Indian mini-budget
Published: 09 January 2004

Cement companies are set to reap significant benefit from January's mini Budget. Industry leaders said the government¹s decision to snip the customs duty on coal by 10 per cent, from 25 per cent to 15 per cent, would have a positive impact on the bottom lines of cement companies.  Anil Singhvi, executive director, Gujarat Ambuja Cements said, ³The comnbined impact of the reduction of import duty on coal from 25 per cent to 15 per cent and the abolition of the 4 per cent special additional duty (SAD) will help companies to further cut their cost of production and be more competitive.²  Gujarat Ambuja imports around 500,000t of coal every year. The current landed price of coal is around $60 per tonne. D D Rathi, chief financial officer, Grasim Industries, said since the imports of coal would become cheaper, domestic prices of coal were likely to soften.  ³This will definitely have a positive impact on the margins of cement companies,² he pointed out. Y M Deosthalee, chief financial officer, Larsen & Toubro said, ³The cut in customs duty on coal will benefit the cement industry. However, this may be offset by international coal and freight rates increasing.² Analysts said the rising rupee had already reduced the import bill of cement companies significantly in rupee terms.