Cuts excise duty on bulk cement to 8% or Rs 230/tonne

Finance Minister, Pranab Mukherjee says the government’s policy on disinvestment does not envisage any outright sale of public sector enterprise. He added that no divestment was planned in FY09 as market conditions were weak. The government will exercise the sovereign responsibility to overcome this crisis. He feels that Indian economy will overcome the crisis & it may take some more time. More policy changes can help it to recover.

Finance Minister cuts excise duty on bulk cement to 8% or Rs 230/tonne; cuts service tax to 10%; cuts excise duty by additional 2%; excise duty of 8% applicable beyond March 31. He also extends custom duty on naptha beyond March 31.

Rajesh Jain says that some kind of these moves was expected last week from the interim budget. However, it is a welcome move especially for the cement & auto sector.

Udayan Mukherjee says that the markets will factor in these positive moves but it will not have a material impact on the stock price movement. It will certainly help to improve the bottomline for cement & auto sector.

Sudarshan Sukhani, Technical Analyst says that investors should not get excited about this intraday bounce back post announcement of cuts. He adds that the intermediate trend is down not only in India but across the globe so one should stay away as of now from this pullback.

M Singhi, ED of Shree Cement says that the government has reduced excise duty on bulk cement from 10% to 8%. It will effectively mean reduction of Rs 3/50 kg bag in excise duty which will be passed on to the customer to some extent. The cement prices in Delhi are ruling around Rs 225-250/50 kg bag.

Malini Malikarjun, Partner at BMR Advisors said that any impetus to service companies is a welcome move and will mean a reduction in base costs. Cement cut will be good news for infrastructure projects. If it is bulk cement, then the impact won’t be a whole lot. Fresh excise duty cut only on bulk cement will not be of material impact on cement companies. A 2% services tax cut is a material cut and the same can not be said about the excise duty cut, she added.