Industry miffed at excise rejig, prices up

But the cement industry and the markets clearly did not like the budget measures. Manufacturers hiked prices by at least Rs 10 per 50-kg bag with immediate effect. Currently, the price hovers around Rs 200-230 across the country.

“We cannot absorb the excise hike and will be forced to pass it on to the customer,” said N Srinivasan, vice-chairman and managing director, India Cements.

He said it is well known that the demand and supply gap is growing day by day and the entire industry is running on near total capacity. Despite this, the finance minister has decided to hike the excise duty to Rs 600 a tonne for bags sold above Rs 190 a bag when the actual price of the commodity has already gone up over Rs 200.

Said Shailendra Choksi, director, JK Lakshmi Cement, “We are still evaluating the proposal announced in the budget. Given the initial understanding, we will have to hike prices instead of absorbing the burden.”

Choksi said the government was artificially trying to regulate cement prices and is interfering with market forces in the process.

“As cement prices vary from company to company and city to city, how the government is going to implement the taxes is an enigma,” said a Mumbai-based analyst.

Commenting on the variable excise duties based on MRP, Grasim CFO D D Rathi said the measures would not help the industry. “The tax structure is hybrid and cement’s contribution to inflation is low. So I see no reason why such steps should be taken,” he said.