Shares of Indian cement makers including ACC Ltd., Gujarat Ambuja Cements Ltd. and Grasim Industries Ltd. fell after the government increased excise duty on the building material.
The government will impose an excise tax of Rs600 ($13.5) a ton on cement sold at more than Rs190 a 50-kilogram bag, Finance Minister P Chidambaram said in his budget speech in New Delhi today. For cement priced below Rs190 a bag, the tax will be cut to Rs350 a ton from Rs400, he said.
The government intends to “penalize” cement makers who don’t hold prices, Chidambaram said.
Inflation in Asia’s fourth-biggest economy rose to 6.73 % in the week ended 3 February, the highest in more than two years. The government, raising inflation concerns, in May last year asked cement companies to cut prices after they gained 25 % on rising demand.
Cement prices have risen by close to 30 % since April last year, according to Sanjay Ladiwala, president of the Cement Dealers’ Association.
Shares of ACC, India’s biggest cement maker, fell Rs96.05, or 10 %, to Rs865 at 12:40 p.m. in Mumbai. Ultratech Cement Ltd., the second-biggest, fell Rs110.4, or 11.7 %, to Rs836.
The country’s third-largest cement maker, Grasim Industries, fell Rs217.2 , or 9 %, to Rs2,115, while Gujarat Ambuja Cements, the fourth-biggest, declined Rs14.9, or 12 %, to Rs110.8.