Cement manufacturers on Tuesday increased prices by an average 6 rupees per 50-kg bag in Mumbai, following a proposal in the budget to restructure the present excise duty, dealers and analysts said.
Cement Stockists and Dealers' Association of Bombay President Sanjay Ladiwala confirmed the development, adding, all the companies have increased the prices.
At present, the hike has been affected only in Mumbai, he said.
India's Finance Minister Pranab Mukherjee, in his budget announcements for 2011/12, has proposed to replace existing excise duty rates with composite rates having "an ad valorem and specific component with some rationalisation".
"The budget proposal has resulted in a 2.50-3 rupee increase per bag, and with effect from today cement manufacturers are increasing the prices, passing on the excise duty to customers," said Ravi Sodha, analyst with Elara Capital.
The average cement prices are in the range of around 260-265 rupees a bag in Mumbai, he added.
The industry had termed the budget as "slightly negative" for the sector, and feared a rise of 8 rupees in cement prices.
The only relief for the sector was a reduction in basic customs duty on petcoke and gypsum, both used in cement production, to 2.5 per cent.
"Apart from the budget proposals, an increase in coal prices of around 30 percent is another reason (for the cement price increase)," said Rupesh Sankhe, sector anlayst with Angel Broking.
The companies will have to raise the prices in the northern and southern regions too, Sankhe said, adding, "Otherwise they would start reporting losses."
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