The Hindu Business Line : Govt hints at ban on cement exports

Pricing woes
Several manufacturers had raised cement prices by Rs 12 per 50-kg bag, citing cost pressures.
Cement manufacturers reiterated that they would consider a roll back in prices only if the Government reversed the tax increase introduced in the Budget.

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New Delhi/Mumbai March 7 With the cement industry still holding out on the price rollback issue, the Government today strongly hinted at a possible ban on cement exports.

Asked whether the Government is planning such a move, the Commerce and Industry Minister, Mr Kamal Nath, said: "We will look at that if that helps in bringing down cement prices."

Several cement manufacturers had raised cement prices by Rs 12 per 50-kg bag, citing cost pressures after the Budget proposed a hike in excise duty on cement to Rs 600 a tonne from Rs 408 for bags sold at more than Rs 190.

Mr Nath also said talks with the industry on the price cut issue had failed to make headway so far. "There is nothing on the anvil regarding the cement price cut. We are waiting for cement manufacturers to come back to us on cement prices," Mr Nath said.

Meanwhile, talking on the sidelines of another meeting later in the day, the Revenue Secretary, Mr K.M. Chandrashekhar, said that the Government had conveyed its concerns on the price hike issue to the cement industry. "The ball is now in the cement industry's court."

Cement manufacturers, meanwhile, reiterated that they would consider a roll back in prices only if the Government reversed the tax increase introduced in last week's Budget. Cement company representatives, who had met the Finance Minister, Mr P. Chidambaram, last night, said they have requested the Government to review the new duty before any rollback could be considered.

"A ban on cement exports is not possible," said Mr Anil Singhvi, Managing Director, Gujarat Ambuja Cements Ltd. "It is not only cement that is involved, it is the reputation and prestige of the country. We have entered into long-term contracts for exports, we have to ensure that our customers are supplied on a continuous basis."

Cement stocks were at the receiving end at the bourses on Wednesday. Gujarat Ambuja Cements was the major loser with the stock losing by about 8.5 per cent at Rs 104.15 against Tuesday's price of Rs 113.80. India Cements declined 5.9 per cent, Dalmia Cements Bharat 6.3 per cent, ACC 4.73 per cent, UltraTech Cement 1.86 per cent and Grasim Industries slipped by 0.97 per cent. According to Mr Arun Kejriwal, an equity strategist at KRIS Securities, today's fall is mainly on account of reported move by the Government to ban export of cement if prices are not rolled back. However, he added that fall could be temporary and cement stocks would bounce back soon.

During calendar year 2007, Gujarat Ambuja exported 1.7 mt of cement, said Mr Singhvi. Total sales volumes during the period amounted to 16.3 mt of cement. Exports constituted over 10 per cent of sales.

Among the cement majors, Gujarat Ambuja Cements and UltraTech Cement are the largest exporters, their production centres being close to the Western Coast. UltraTech exports over 3 million tonnes of clinker and cement per annum. "Cement and clinker is exported to countries around the Indian Ocean, Africa, Europe and the Middle East. Europe and the UAE are the major markets for UltraTech Cement," says the company Web site. Export realisations saw a rise during the last fiscal, due to the construction boom in West Asia.

`No impact'

Analysts said that though a ban on exports would have no impact on sales since domestic demand is so good that it could mop up any additional supplies. However, it could dent margins, they said.

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