Analysts point out that ACC, the largest transporter of cement through the railways, will be affected most as the freight may go up by Rs 6-7 crore due the hike. For ACC, the yearly freight comes close to Rs 145 crore a year.

Larsen & Toubro, however, is not likely to be impacted much because of the railway freight hike as it transports almost 65 per cent of its consignment through roads.

Analysts say that L&T has been relying more on roads for transporting cement consignments, and the railway freight hike may accelerate the process. "With the freight hike, the railways may end up hurting themselves," said a company source.

Gujarat AmbujaCements, a key player in the West, transports only 20 per cent of its cement consignments by rail. Cement movements for the company are mostly through sea, while the inland transport by the company is predominantly by road.

According to industry officials, the impact of the hike as per the Cement Manufacturers' Association (CMA) formula is said to be around Rs 1.50 per bag of 50 kg. But in reality the impact would be much less as most companies do not transport cement and coal to a distance of 750 km and 1000 km respectively considered in that formula. The impact is expected to range between fifty paise and Re 1.00 per bag.

The impact is said to be lower basically on account of the fact that most of the manufacturers have already shifted their freight movement to road. For example almost all cement manufacturers in the south use imported coal and the same is taken from port to their factories by road. India Cements, Madras Cements, Chettinad Cements and L&T transport most of their coal from Chennai Portto their factories by road.

Even for cement movement, companies have decreased their dependence on railways. Madras Cements, which till recently moved a significant portion of its Jayantipuram output by rail, has opted for road and the fact that they now sell most of their production in Andhra Pradesh itself also helped. Chettinad Cements transports only about 20 per cent of its production by rail and the impact would be limited to that extent.

India Cements uses railways mostly in its AP operations. Chilamkur plant in AP uses railways to about 80 per cent while Raasi uses it for transport out of the state. Dalavoi output is transported entirely by road while about 20 to 30 per cent of Sankari Durg and Sankar Nagar production move through rail.

Among all the manufacturers in South, L&T, as per analysts, uses the railway system the most. Over 50 per cent of its production from Tadpatri plant is moved by rail and it also uses the railway system to transport cement from its Awarpur plant inMaharashtra.

Gujarat Ambuja's reliance on railways, analysts say, is said to be low. ACC may also take an impact, they added.