All the major cement manufacturers have reduced the price of cement by up to Rs 7 per bag due to the government's move to reduce CENVAT by 4%.

Led by the country's largest manufacturer ACC, leading firms like Ambuja, JK Lakshmi, JK Cement, Dalmia Cement and Shree Cement have slashed their rates. Cement is available between Rs 150 and Rs 250 across the country. ACC and Ambuja Cements together, have a capacity of 41 million tonnes (MT), one-fifth of the total domestic market. They have plans to add another 15 MT of fresh capacities by 2010.

Ambuja Cements said, "The Indian Railways have increased the freight tariff by changing the classification for coal and cement which is expected to push the prices of cement up by Rs 1.50 to Rs 2 per bag. After factoring in the increased railway tariff, the price of our cement is expected to go down by Rs 4 to Rs 6 per bag from today."

The maximum amount of reduction was announced by Delhi-based JK Lakshmi Cement by up to Rs 7 a bag. Madhusudan Shah, a Mumbai-based cement dealer stated, "This was bound to happen as demand from the builders was on the decline."

Meanwhile, there is an across the board reduction in excise duty, analysts said that this should translate into a reduction of Rs 10 a bag. But others remains doubtful. Companies may not cut the rates to that extent.

A cut of Rs 5-6 seems to be on the card in the next few days across the country. During April-October this year, the cement production growth rate declined to 6.3 per cent against last year's 8.2 per cent. Similarly, the despatches (including exports) during the same period grew only by 6.27 per cent against 8.23 per cent last year.