The Hindu Business Line : Cement firms not to raise prices for a year

Give and take
Govt has not given any assurance on duty cuts
Budget raised excise duty by Rs 200 a tonne
Industry augmenting production to 100 mt

New Delhi March 9 Under sustained pressure from the Government, cement companies today agreed to keep prices stable for a year even if input costs go up.

They, however, ruled out any rollback in the recent increase in prices until the Centre reviews the excise duty hike imposed in Budget 2007-08.

"The cement producers have agreed to hold the price line and not increase prices any further in the next one year even if there is an increase in input costs," said the Commerce and Industry Minister, Mr Kamal Nath, after a meeting with cement industry representatives.

He added that the companies have agreed to roll back the increased prices if excise duty on cement is cut.

"They also agreed that if any concession is given to them on excise duty and other statutory levies, they will pass on the benefit to consumers."

The consensus emerged after a two-hour meeting that Mr Nath and officials of the Department of Industrial Policy and Promotion (DIPP) held with cement companies.

However, the companies were firm on the price rollback issue and reiterated that any decision on price cuts would be conditional to the Centre pruning the increased excise duty.

"If the Government reduces levies, they will be completely passed on to the consumers," said Mr Manoj Gaur, President of the Cement Manufacturers' Association (CMA), who led the delegation.

But the Government has not given any assurance on duty cuts, he added.

He also said that the manufacturers are open to further talks with the Finance Minister, Mr P. Chidambaram.

A Government statement issued after the meeting said that Mr Nath strongly urged the producers to reduce the prices that have risen significantly, particularly after February 28 when an additional excise duty of Rs 200 a tonne was slapped on cement costing over Rs 190 a bag.

At today's meeting, the manufacturers expressed their inability to absorb the hike in levies citing pressure on their margins on account of increase in costs of energy, transportation and inputs like fly ash.

Drawing the Centre's attention to the higher-priced coal they have to obtain from the open market, they said that the most sustainable way of controlling prices was to increase supply faster than demand, which is growing at 10 per cent annually.

CMA representatives said that the industry is in the process of augmenting production capacity to the tune of 100 million tonnes.

This would come on-stream over the next three years at an investment of Rs 40,000 crore.

The Budget had imposed differential excise tariff on cement based on selling price, effectively raising the excise duty for 50-kg bags priced over Rs 190.

This prompted several manufacturers to raise prices the following day by Rs 10-12 per 50-kg bag.

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