KARACHI: Owing to the rising Federal Excise Duty (FED) through the finance bill 2016, the cement prices would be increased by Rs 35-40/bag or around 7 per cent throughout the country from July 1, 2015.
The owners of cement companies have announced on Tuesday through different channels that the prices on cement bag has been increased of around Rs 35-40 per bag from July 1, 2016 as 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.
In order to pass on the above impact, cement producers raised prices from around Rs 515/bag to Rs 550/bag. Cement manufacturers have made changes in their quotas in order to accommodate this price hike. However, the analysts believed that the decision of increasing FED will directly hurt the cement exports.
There would 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.