Manufacturing cost for cement is likely to go up by Rs 7-10 per bag of 50 kg due to the proposed freight hike on various inputs and the commodity...
Manufacturing cost for cement is likely to go up by Rs 7-10 per bag of 50 kg due to the proposed freight hike on various inputs and the commodity, but domestic firms would prefer to wait for the main Budget to take a call on raising the price.
“The cost of production will go up in the range between Rs 7-10 per bag. This is a back of the envelope calculation,” said spokesperson of a leading cement firm.
Asked whether the company would pass on the increased cost of manufacturing and dispatch to consumers, he said the company was yet to take a call on that.
The Railway Budget proposals, presented by Union Minister Suresh Prabhu in Parliament today, proposed to increase freight rates of coal and slag, used in the manufacturing of cement, by Rs 45.70 per tonne and Rs 20.9 a tonne respectively; and also hiked rate by Rs 21 per tonne for cement, but reduced tariff for limestone by Rs 2.7 a tonne.
Coal is a basic necessity for cement making, but all the domestic steel makers do not use slag for making the building material, but those which use it generally carry them by road. Limestone is also mostly ferried by road only.
“The freight rate hike is likely to increase our cost of production in the range between Rs 2-4. However, price is determined on the demand and supply,” said Mahendra Singhi, Whole-Time Director, Dalmia Bharat Cement.
Jaypee Cement’s Whole-Time Director Shiva Dixit said even as the freight rate hike has an impact on input prices, they would wait for the main Budget to see the cost implication before taking a call on raising the price.