Our Bureau

Mumbai , Feb. 28

INCREASED allocations for the development of national highways as well as the Budget's emphasis on infrastructure development got the cement stocks looking up on the bourses.

But, apart from the measures that kindled hopes of demand growth, the rest of the Budget proposals have left the industry either disappointed or indifferent.

"My worry is that cement will be particularly hit because of reduction in depreciation, this will increase the tax burden. Cement is already one of the most taxed sectors in the country," said Mr D.D. Rathi, group executive president and CFO with Grasim Industries. "Excise duty is 35 per cent. Removal of MAT is a good point."

But overall, despite the net reduction of around 3 per cent in corporate tax, considering the new fringe benefits tax, which could be a potential tax-sapper, cement would still remain a heavily taxed industry, he said.

Mr Anil Singhvi, Executive Director, Gujarat Ambuja Cements Ltd, said decreased depreciation should not impact the sector much since there is not much of new capital expenditure happening.

Decreased duties on various fuels will not have much of an impact on the sector, since there are set-offs available to corporates, said these officials.

The increase in specific duty on cement clinker from Rs 250 per metric tonne to Rs 350 per metric tonne has brought mixed reactions from the industry. While Mr Singhvi of Gujarat Ambuja and Mr Rathi of Grasim felt this would effectively curb excise evasion by small units, Mr A.K. Jain, Director, Marketing, The Associated Cement Companies, felt that the net impact would be an increase in costs.

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