Due to the increase in Federal Excise Duty (FED) through the Finance Bill 2016, the cement prices will be increased by Rs 35-40/bag or around 7 per cent throughout the country from July 1.
The owners of cement companies announced on Tuesday through different channels that the prices of cement bags will be increased by around Rs 35-40 per bag from July 1as the federal government changed the FED mechanism from variable 5 per cent of Marginal Retail Price (MRP) to a fixed Rs 1/kg (Rs 50 per bag). The government also reduced import duty on coal from 6 per cent to 5 per cent.
The prices of cement bags will increase to Rs 550 per bag from the current Rs 515. Cement manufacturers have made changes in their quotas in order to accommodate this price hike. Analysts believe that the decision of increasing FED will directly hurt the cement exports.
There will be a one-time change in cement prices for the full year 2016-17. The decision will increase the average price for the full year, thereby jacking up 2016-17 earnings forecast by around 2 per cent.