Cement manufacturers ignore FM's advice, raise cement price

Mumbai, Mar 1 (UNI) The cement manufacturers in western and northern parts of the country have today raised the cement price by Rs 12 per 50 kilogram bag.

Despite the Union Finance Minister, P Chidambaram asking the industry this morning to hold the price line to help the government contain rising inflation, the cement manufacturers increased the rates. The reason being cited by the cement manufacturers for the current price hike is the 'unprecedented' differential excise duty structure to hold the price of cement as introduced by the Government in the Budget for the next fianancial year.

The Finance Minister had raised the excise duty on cement priced above Rs 190 per 50 kg to Rs 600 per tonne from Rs 400 in the current Budget which was presented by him in the Parliament.

When contacted by UNI, the CFO of JK Cements Ltd, A K Saraogi, said ''It's difficult to justify the cement price without raising it at a time when the excise duty had been raised by the Government in the Budget.'' He confirmed that from today onwards all the despatches of cement bags being released from his plants for sale will carry price tag showing an increase of Rs 12 per bag. Same indication has been given by other cement manufacturers too.

Group Executive President of the company, R G Bagla said through a release ''The imposition of dual excise duty on cement in the Union Budget is uncalled for.'' Presently there is a mismatch in demand and supply of cement and the dual excise duty on cement will only lead to further increase in price of cement, especially for the big government projects and in fact for all consumers, where there is stipulation that duties and taxes are as applicable, he said.

Hence, he insisted that market forces will decide whether the higher excise duty would be passed fully or partly to consumers.

Cement makers feel that they would simply pass on the excise burden to the customers as demand continued to remain strong. Sanjay Ladiwala, President, Cement Stockists and Dealers Association, said ''The average wholesale price of cement in Mumbai, after the price hike, would be Rs 233 per 50 kg bag and the retail price Rs 245.'' However, he maintained that the price of per 50 kg cement bag may vary by Rs five depending on the brand being carried by it.

The industry is of the view that there is also a lot of thrust on infrastructure, which would mean that demand would continue to grow at the present rate of around 10 per cent. However, the dual policy will hamper projects and the country will continue to face a shortage of cement. It will also have implications on the Rs 55,000 crore committed by the cement sector in the next five year plan for new capacity,a spokesperson of J K Cement Industries here said.

UNI