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Suresh P. Iyengar

LIC increases stake in ACC to 12.8%

Mumbai March 9 Even though the companies agreed to hold the cement prices steady for a year, the stock market did not react positively to the development. Cement manufacturers have also agreed to lower prices if the Government cuts levies.

Following a meeting with cement manufacturers, the Union Commerce Minister, Mr Kamal Nath, said, "Cement makers will hold prices even if there is an increase in input prices." Cement stocks have been volatile ever since the Union Finance Minister, Mr P. Chidambaram, proposed a differential excise duty based on retail prices in the Budget.

Banning Exports

Cement stocks crashed on the BSE. While Madras Cements tanked Rs 140 per share to Rs 2,581, Birla Corp plunged by 9.66 per cent to Rs 207. Other losers include Shree Cement 10 per cent to Rs 1,026, ACC 6.30 per cent to Rs 780, India Cements 8.26 per cent to Rs 153 and Mysore Cements 9.8 per cent to Rs 39.

"Holding retail prices artificially at any level does not augur well for the companies. Profit margins may come under pressure particularly when demand peaks in the next two months. Cement prices are anyway expected to come down from June with the onset of monsoon, when construction work is tardy," said an analyst. Mr Kamal Nath on Wednesday said the Government might consider banning cement exports if that could help cool prices.

While the Budget hiked excise duty on cement priced above Rs 190 per bag (50 kg) to Rs 600 per tonne from Rs 400, for cement priced below Rs 190 it was lowered to Rs 350 from Rs 400. Cement prices across the country went up Rs 10-12 per kg the day following the Budget. Though cement manufacturers refused to roll back the prices, they had to give in due to political pressure.

LIC hikes stake in ACC

Meanwhile, Life Insurance Corporation informed the Bombay Stock Exchange that it picked up an additional three per cent stake in ACC through open market transactions on March 5. Following the purchase of shares, LIC holding in the company rose to 12.80 per cent (or 2.39 crore share) from 9.8 per cent (or 1.835 crore shares).

The deal comes close on the heels of the news that Swiss cement maker Holcim and India's Sekhsaria group have increased their stake in ACC Ltd by over 2 per cent by buying 3.6 million shares from February 14 to March 6.

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