The Hindu Business Line : Profit margins squeezed, cement cos raise concerns

Mumbai, Apr 25 The battle lines between cement companies and the Government seem to have been drawn. Cement majors ACC and Ambuja Cement on Friday accused the Government of helping cement companies in Pakistan by allowing duty free imports rather than facilitating Indian companies.

Mr A.L. Kapoor, Managing Director of Ambuja Cement, said: “The Government withdrew both Customs duty and 18 per cent countervailing duty on cement imports. On the other hand, Indian companies pay an excise duty of Rs 600 a tonne. Pakistan companies exporting to India do not pay any duty in their country either. This has put them in an advantageous position.”

If the Government gives Indian companies 35 per cent abatement on excise duty as recommended by the Commerce Ministry, it would bring down prices by Rs 300 a tonne immediately, he said.

Mr Sumit Banerjee, Managing Director of ACC, said despite all the concessions, the Pakistani companies had increased prices from $74 per tonne (free-on-board) to $83 a tonne.

While making cement imports duty-free, the Government should at least considered abolishing import duty on coal, which is a key raw material for cement manufacturing.

Accusing some dealers for taking advantage of demand- supply mismatch, Mr Banerjee wondered: “Even if we are ready to drop prices by Rs 5 for a 50-kg bag, is there a guarantee that dealers will pass on the benefit to the customers? Prices are driven by market dynamics not by the producers.”

Denying cartelisation in the industry Mr Kapoor said: “Though ACC and Ambuja Cement are owned by Holcim, we do not discuss prices.

On demands from the construction sector for curbing arbitrary price rise, Mr N.S. Sekhsaria, Chairman of ACC, said: “The share of cement in total construction cost has actually declined from around 15 per cent a decade ago to 10 per cent. The cost of other construction materials have appreciated much more than cement.”

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