ACC had gained 8.52% to Rs 900.05, Ambuja Cements 4.77% to Rs 122, Ultratech Cement 5.52% to Rs 855.20 and Grasim Industries 4.6% to Rs 2620.

ACC had risen 3.92% from its recent low of Rs 798.45 on 13 June 2007 to Rs 829.80 on 27 June 2007. From a recent low of Rs 109.20 on 11 June 2007, Ambuja Cements had gained 6.6% to Rs 116.45 on 27 June 2007. Ultratech cement had jumped 2.53% from its recent low of Rs 790.50 on 13 June 2007 to Rs 810.50 on 27 June 2007. Birla Corp had surged 24.8% from a recent low of Rs 210.10 on 13 June 2007 to Rs 262.30 on 27 June 2007. Grasim Industries had spurted 6.66% from its recent low of Rs 2346.60 on 11 June 2007 to Rs 2502.85 on 27 June 2007.

Chidambaram also said cement prices had gone up by a few rupees in south India.

The Union Budget 2007-08 had introduced differential excise duty based on the retail price on cement. If the maximum retail price (MRP) wa up to Rs 190 per 50 kilo gram (kg) bag, then the excise duty on cement (of large players) was reduced from Rs 400 per tonne to Rs 350 per tonne. If the MRP exceeded Rs 190 per 50 kg bag, then the excise duty on cement (of large players) was increased from Rs 400 per tonne to Rs 600 per tonne. Similar change has been made for mini cement plants.

For MRP of up to Rs 190 per 50 kg bag, the excise duty on cement for mini cement plants was reduced from Rs 250 per tonne to Rs 220 per tonne. For MRP in excess of Rs 190 per 50 kg bag, the excise duty for cement produced by mini cement plants was increased from Rs 250 per tonne to Rs 370 per tonne. The government had announced the differential excise structure to rein in rising cement prices and with a broader view of containing inflation.

But taking advantage of favourable demand supply scenario, the cement companies had increased the cement prices by Rs 10-Rs 12 per 50 Kg on 1 March 2007 rather than rolling back the prices.

Meanwhile, the government also removed the countervailing duty and special additional duty on customs on import of cement to further ease the prices but the prices failed to soften.

Subsequently on account of government pressure, the cement industry agreed not to hike the prices for a year.

To control inflation, the government eventually changed the excise duty from a flat dual structure to ad valorem at 12% of the MRP above Rs 190 per bag and up to Rs 250 per 50 kg bag. The concessional duty of Rs 350 per tonne for cement sold below Rs 190 per bag continues. This has resulted in a decrease in excise tax on cement sold below Rs 250 a bag.

About two months ago, cement firms promised government that they wouldn’t hike price for one year, in government’s efforts to combat growth in inflation.

The Cement Manufacturers' Association (CMA) reported a rise in cement sales by 10.6% to 14.21 million tonnes in May 2007.

Analysts feel that at a time when the cement industry has agreed not to hike cement prices for one year, cement makers whose capacities will come on stream in the near term, are able to increase blending, take advantage of regional price differences and undertake cost cutting measures will be better placed than others in near term.

It is expected that 18-20 million tones of capacities will come on stream in FY 2008 and much more in FY 2009. On the positive side, booming real estate sector, capacity additions by major industries, and huge investments proposed in special economic zones (SEZs) can scale up demand. Also, with bumper cash flows, the holding power of the industry has improved.

After witnessing a concrete surge in profit in FY 2007, the industry is bracing itself for a softer growth in the current fiscal and softening of profitability in next fiscal.

ACC’s net profit surged 54.47% to Rs 363.75 crore in Q1 March 2007 as against Rs 235.48 crore in Q1 March 2006. Net sales were up 23.68% to Rs 1634.76 crore in Q1 March 2007 as against Rs 1321.80 crore in Q1 March 2006.

Ambuja Cements’ net profit jumped 43.1% to Rs 590.74 crore in Q1 March 2007 as against Rs 412.77 crore in Q1 March 2006. Net sales rose 33.5% to Rs 1433.84 crore in Q1 March 2007 as against Rs 1074 crore in Q1 March 2006.

UltraTech Cement’s net profit soared 75.26% to Rs 231.54 crore in Q4 March 2007 as against Rs 132.11 crore in Q4 March 2006. Sales were up 38.21% to Rs 1465.52 crore in Q4 March 2007 as against Rs 1060.35 crore in Q4 March 2006.

Birla Corporation’s net profit spurted 50.71% to Rs 101.19 crore in Q4 March 2007 as against Rs 67.14 crore in Q4 March 2006. Sales moved up 12.69% to Rs 444.06 crore in Q4 March 2007 as against Rs 394.06 crore in Q4 March 2006.