The Hindu Business Line : Cement cos drop prices in North

New Delhi May 5 In response to the Finance Minister's ad valorem duty proposal, cement manufacturers in the Northern markets have decided to scale down the maximum retail price (MRP) printed on cement bags effective from Sunday. This could translate into lower prices of between Rs 2 and Rs 5 across the northern States, and manufacturers in other regions are also expected to follow suit.

"Cement manufacturers in the Northern markets have decided to bring down the MRP on bags effective from tomorrow. This would result in a lowering of MRP on bags by about Rs 4 in the Rajasthan market and around Rs 2-3 per bag in other northern markets including Delhi, Uttar Pradesh, Uttaranchal," the Cement Manufacturers Association Vice-President and Shree Cements Managing Director, Mr H.M. Bangur, told Business Line.

He said the decision to lower prices has been taken by individual manufacturers and not through the Cement Manufacturers Association.

Manufacturers across other markets are likely to follow suit in the due course, he added.

On Thursday, the Finance Minister, Mr P. Chidambaram, had announced an ad valorem duty of 12 per cent for cement selling above Rs 190 for a 50-kg bag, instead of the increased specific duty of Rs 600 per tonne proposed in the Budget 2007-08. Cement selling at a price below Rs 190 was to, however, continue with a lower specific excise duty of Rs 350 per tonne announced as part of the Budget proposals. Mr Chidambaram had said that he expected the move to result in an effective duty reduction of up to Rs 7 per bag.

Earlier, in his Budget speech on February 28, the Finance Minister had introduced a dual excise duty structure on cement manufacturers. According to the proposal, cement companies had to pay an excise tax of Rs 600 per tonne if they priced a 50-kg bag at over Rs 190, while those selling below the cut-off price were required to shell out a lower excise duty of Rs 350 per tonne. The cement sector was facing a flat excise duty of Rs 400 per tonne previously. The dual duty structure was opposed by the industry, which responded by jacking up prices across most markets citing the higher incidence of excise as the reason for the move.