Duty rejig on cement: How are cos impacted now????

The Finance Minister has announced a 12% ad valorem duty on cement sold above Rs 190 per 50 kg bag. Also there would be an effective reduction of up to Rs 7 per bag on the excise duty liability (under ad valorem duty).

What impact will this have on cement companies?

This specific excise duty was there earlier; in the last Budget they introduced dual specific duty and now this time it is dual specific cum ad valorem specific duty. This will create some confusion in billing and paper work will increase.

There will be some reduction in excise duty for price between Rs 190-250. But it will create a lot of complications.

n a market like Mumbai, it will not have any affect at all but in places like Andhra Pradesh, certain areas in Rajasthan and Madhya Pradesh, where prices are ranging around Rs 220-230 there will definitely be a reduction in excise duty between Rs 4-7.

e have had a buy rating on all the stocks, contrary to most of the people on the street and this has done quite well because in the last one month, if you see cement stocks had given 20% returns.

So, we are maintaining our buy rating because we believe that the demand supply is likely to be constrained till the later part of FY09 and only in FY10, we might see some surplus in northern region and that too if the demand continues the way it is at 14% and given that Commonwealth games are also due in 2010, I do not think there might be too much cause of a worry even later on.