Binani Cement Ltd. the flagship company of Braj Binani Group is currently having capacity of 8.5mn ton cement in its units located in India, Dubai and China. Due to Economic slowdown and higher input cost, cement industry is currently passing through difficult times with demand growth slowing down.

This situation has been further worsened due to withdrawal of custom duty and CVD on import of cement and this was done at a time when the industry has responded positively to the growing demand for cement in the industry by planning to double its capacity from 165mn ton in 2007 to 300mn ton in 4 to 5 years. The prevailing situation has obviously forced the Industry to run at a lower capacity utilization which further pushed up the cost of production.

The company strongly feels that the time has come for the government to take proactive action to insure uninterrupted growth in demand for cement. The government of India has recently announced sops for Steel Industry by imposing 5% custom duty on imports but the cement industry has been left high and dry.

Since both steel and cement demands are catalyst to industrialization and economic growth, the Government should consider giving the required support to domestic cement industry to boost demand by (1) re-imposing customs duty and CVD on import of cement (2) withdrawal of customs duty on import of coal and (3) reduce the excise duty by getting back to specific excise duty of Rs.400 per MT plus cess instead of the prevailing MRP based excise duty which is more than Rs.500 per MT (introduced from May ’07). Once this is implemented, price of cement will become cheaper by atleast Rs.6/- per bag and consumption will increase and consumers will benefit.

Coming to export front, the government should encourage export of cement by giving more export incentives by way of 5% duty benefit through DEPB, concessional rail freight to the port etc. since this will absorb the additional capacity in the pipeline, increase forex reserves and will also create new jobs. The recent announcement of 2.5% duty benefit through DEPB on export of cement is inadequate and does not serve the desired objective.

source: Indiainfoline

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