Budget Impact on Cement Sector

Budget Impact on Cement Sector

Following are important measures for Cement Sector

1) The government has allocated Rs550b for the PSDP in the 2008-09 budget as
compared to revised allocation of Rs450b in 2007-08, showing an increase of 15.6%. Under the sectoral distribution of the PSDP, an amount of Rs165b has been made for infrastructure, Rs188b for social sector and Rs18b for agriculture and Industry. It will have a positive impact of cement sector because it shows the government’s focus toward infrastructure development, which will support the local sales growth.

2) Central Excise duty on cement has been enhanced to Rs900 per ton from current Rs750 per ton. It will increase the CED on each bag by Rs7.50 per bag to Rs45.0 per bag from existing Rs37.5 per bag. In our opinion, cement manufacturers will easily pass on this to the consumer by increasing cement price per bag in the range of Rs10-15.


3) The government has increased the GST by 1% to 16% from earlier 15%. It will have a negative impact on the sector it will further increase the cement prices, which may hit its demand. It will also erode the positive effects of the recent price hike in the local market.