Cement to be cheaper by Rs4-7 a bag

Major cement companies in the country, including ACC, Ambuja Cements and Shree Cement, have cut prices by Rs4 to Rs 7 per bag of 50 kg of cement, responding to the government's announcement of excise duty cuts two days ago.

ACC cut prices by Rs5 a bag and Ambuja Cements cut prices by Rs6 per bag, while Shree Cement cut prices by up to Rs7 per bag, after the government announced a 4 per cent reduction in excise duty and lowered the central value added tax (CENVAT) to a uniform 4 per cent.

The companies said they have not passed on the entire benefit of excise duty cut due to a hike in railway freight rate for cement. JK Lakshmi, JK Cement, Dalmia Cement etc have also cut prices following the announcement of a reduction in tax rates.

ACC, merely said it is reducing price by up to Rs5 per bag. This was also confirmed by J Datta Gupta, chief commercial officer, ACC Limited.

The government has reduced the excise duty on cement from 12 per cent to 8 per cent across the board. This excise reduction is expected to moderate the high incidence of excise duty on cement.

Cement prices are currently ruling between Rs238-270 per 50 kg per bag. Had the benefit of the excise duty cut been fully passed on to the consumers, cement prices would have been lower by Rs 8-10 per bag.

"The Indian Railways have increased the freight tariff by changing the classification for coal and cement which is expected to push the prices of cement up by Rs1.50 to Rs2 per bag. After factoring in the increased railway tariff, the price of our cement is expected to go down by Rs4 to Rs6 per bag from today," Ambuja Cements said.

The government has not declared a similar reduction in excise on clinker which stays at Rs450 per tonne. Clinker is the base raw material for manufacturing cement. Ambuja Cements expects a further reduction in clinker excise duty to ensure a real reduction in excise duty incidence on cement.