...Cement could become marginally cheaper...
The Times of India, February 25, 2009, Page 26
TEAM TOI
The government’s move to reduce excise duty on bulk cement from 10% to 8% will result in a marginal drop of Rs 3-4 a 50 kg bag on retail levels. “The move to drop levies on bulk cement is to allign it with cement sold in bags, which is already taxed at 8%. This is more of a correction of an anomaly in the system,’’ said Rakesh Singh, V-P (marketing), The India Cements.
Therefore, in his view, prices for bulk-buyers, like ready mix concrete (RMC) batching units, could drop marginally. A V Dharmakrishnan, executive director, Madras Cements, said the move to lower duties would result in a price cut of Rs 3-4 a 50kg bag at the retail level.
Industry players said the drop would be between Rs 60 and 70 a tonne for bulk buyers like construction companies and RMC units.
“Typically for a large cement company, bulk sale is only 6-10% of turnover. Also, even if it means lower prices at the retail level this move would mean Rs 3-4 reduction per bag. For a product being sold at Rs 220 or Rs 230 at the retail levels this (reduction) is hardly anything,’’ industry sources added.
Besides, cement buying doesn’t get influenced by lowering excise duties marginally. “You buy cement when you construct. It has got to do more with sentiment rather than prices. True, the government is trying to perk up spending. Cement demand is inelastic to price, therefore lowering prices will not result in higher demand,’’ sources added.
The Times of India, February 25, 2009, Page 26
TEAM TOI
The government’s move to reduce excise duty on bulk cement from 10% to 8% will result in a marginal drop of Rs 3-4 a 50 kg bag on retail levels. “The move to drop levies on bulk cement is to allign it with cement sold in bags, which is already taxed at 8%. This is more of a correction of an anomaly in the system,’’ said Rakesh Singh, V-P (marketing), The India Cements.
Therefore, in his view, prices for bulk-buyers, like ready mix concrete (RMC) batching units, could drop marginally. A V Dharmakrishnan, executive director, Madras Cements, said the move to lower duties would result in a price cut of Rs 3-4 a 50kg bag at the retail level.
Industry players said the drop would be between Rs 60 and 70 a tonne for bulk buyers like construction companies and RMC units.
“Typically for a large cement company, bulk sale is only 6-10% of turnover. Also, even if it means lower prices at the retail level this move would mean Rs 3-4 reduction per bag. For a product being sold at Rs 220 or Rs 230 at the retail levels this (reduction) is hardly anything,’’ industry sources added.
Besides, cement buying doesn’t get influenced by lowering excise duties marginally. “You buy cement when you construct. It has got to do more with sentiment rather than prices. True, the government is trying to perk up spending. Cement demand is inelastic to price, therefore lowering prices will not result in higher demand,’’ sources added.
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