The expected thrust on infrastructure and affordable housing schemes along with a likely increase in the deduction limit for interest on home loans would be positive for all cement companies.
Expectations
* Lower excise duty rates of 8 per cent (reduced from 12 per cent in Dec โ08) to continue in order to boost consumption.
* Special focus on infrastructure development, through greater allocation for various schemes. Investment in roads (especially rural connectivity) and affordable housing schemes are expected to get a boost. Measures like easing of FDI norms for investment in affordable housing would stimulate demand.
* Increase in the deduction limit for interest on home loans.
* Lowering of customs duty on coal, from 5 per cent now.
Impact on the sector
The excise duty rate, if increased, would be neutral for the sector as it may lead to an increase in cement prices given the present tight demand-supply equation. The special focus on infrastructure development and affordable housing and the increase in the deduction limit for home-loan interest would boost demand for cement.
Companies impacted
The thrust on infrastructure and the housing sector would be positive for all the companies. No change in excise duty would be neutral for them. Companies like India Cements which import a large quantity of their coal requirements would benefit from the reduction/abolition of import duty on coal.
(The report has been prepared by Jaspreet Singh Arora and Manish Valecha.)